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Showing 221 to 240 of 2067 Records
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2017 (11) TMI 1849
The Supreme Court dismissed the special leave petition due to a small revenue amount involved (Rs. 4.19 lakhs approximately). Delay was condoned. Justices Ranjan Gogoi and Navin Sinha heard the case.
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2017 (11) TMI 1848
Rectification u/s 254(2) - mistake apparent from the record - GP calculation - HELD THAT:- We find that in the present cases, the books of accounts of the assessee were rejected and the AO had estimated the incomes of assessee by applying gross profit ratio on the basis of gross profit ratio calculated on the basis of discount received by assessee from the suppliers.
CIT(A) calculated profit on gross profit ratio on gross purchases as well as gross profit ratio on net purchases (that is after discount) and applied the gross profit ratio arrived at on the basis of net purchases whereas the Hon'ble Tribunal had held that the gross profit ratio calculated on the basis of gross purchases is to be applied and in this respect has passed a speaking order after recording its findings
As decided in RAS BIHARI BANSAL PROP. BANSAL AND CO. VERSUS THE COMMISSIOENR OF INCOME TAX (APPEALS) -X, 2. THE INCOME TAX OFFICER [2007 (4) TMI 47 - HIGH COURT, NEW DELHI] Section 254 enables the concerned authority to rectify any “mistake apparent from the record”. It is well settled that an oversight of a fact cannot constitute an apparent mistake rectifiable under this section. Similarly, failure of the Tribunal to consider an argument advanced by either party for arriving at a conclusion is not an error apparent on the record, although it may be an error of judgment. The mere fact that the Tribunal had not allowed a deduction, even if the conclusion is wrong, will be no ground for moving an application under section 254(2) of the Act. Further, in the garb of an application for rectification, the assessee cannot be permitted to reopen and re-argue the whole matter, which is beyond the scope of the section - Miscellaneous Applications filed by the revenue are dismissed.
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2017 (11) TMI 1847
Late filing fee u/s 234E - processing the statement under Section 200A - HELD THAT:- The late fee envisaged in Section 234E of the Act has been charged by the AO in this case while processing the TDS statement under Section 200A on 14.06.2013, which is indeed prior to 01.06.2015. Ostensibly, a perusal of bare provisions of Section 200A of the Act show that prior to 01.06.2015, it did not empower the AO to levy the fee prescribed in Section 234E of the Act, while processing the statement of TDS. Thus, the stand of the assessee is borne out of the bare provisions of the Act, as it stood at the relevant point of time. See GAJANAN CONSTRUCTIONS AND OTHERS VERSUS DCIT, CPC (TDS) , GHAZIABAD, UTTARPRADESH AND ITO (TDS) , NASHIK [2016 (10) TMI 92 - ITAT PUNE]
We charged by the Assessing Officer under Section 234E of the Act while processing the statement under Section 200A of the Act, as being bereft of jurisdiction at the relevant point of time.
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2017 (11) TMI 1846
Treatment of Business income as Royalty income - no fixed place of business or permanent establishment in India - DRP confirming entire payments received by the Appellant from customers in India during the captioned year are taxable as "royalty" u/s 9(1)( vi) and under Article 12 of India - Ireland DTAA - HELD THAT:- The issue has been decided by this tribunal in assessee‟s own case against the assessee [2017 (4) TMI 1461 - ITAT MUMBAI] as relying on [2014 (1) TMI 1281 - ITAT MUMBAI] as held a customer of the present assessee made payment without deduction of tax at source u/s 195 of the Act - the payments made for online use of database was for licence to use said database and hence the consideration was royalty, liable for deduction of tax at source u/s 195 - Decided against Assessee.
Interest u/s. 234B - HELD THAT:- AO erred in charging the interest u/s. 234B as assessee being a non-resident, the Indian payers were obliged to withhold Tax at Source u/s. 195 and therefore the question of payment of advance tax and corresponding levy of interest u/s. 234B of the Act does not arise. - Decided in favour of the assessee
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2017 (11) TMI 1845
TDS u/s 195 - tax withheld on payments for purchase of software - Double Tax Avoidance Agreement - HELD THAT:- We find that the coordinate bench in the matter of Intertec Software Pvt. Ltd., vs ITO [2017 (10) TMI 1472 - ITAT BANGALORE] wherein the author of this order was the co-author, after relying upon the judgment of the jurisdictional High Court in the matter of CIT (Intl.Taxn) v. Samsung Electronics Co. Ltd . [2009 (9) TMI 526 - KARNATAKA HIGH COURT] and distinguishing the later judgment of the jurisdictional High Court in WIPRO Ltd. vs. DCIT [2015 (10) TMI 826 - KARNATAKA HIGH COURT] has held as
In view of the provisions of Section 90 of the Act, agreements with foreign countries DTAA would override the provisions of the Act. In view of the said finding, it is clear that there is obligation on the part of the respondents to deduct tax at source under Section 195 of the Act.
Further, it is stated that obligation to deduct TDS u/s 195 arises only when there is a sum chargeable under the Act and not all payments are subject to TDS. - Decided against the assessee.
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2017 (11) TMI 1844
Income accrued in India - payment of commission to non-resident is taxable in India in view of the provisions of Sec. 9(1)(i) - income of the non-resident by way of payment of commission - HELD THAT:- Respectfully following the decisions of the co-ordinate bench of this Tribunal in the cases of Exotic Fruits (P) Ltd [2013 (10) TMI 826 - ITAT BANGALORE]; and Puma Sports India Pvt. Ltd. (supra); we also hold that the income of the non-resident, ‘A V & Sons’ by way of payment of commission in the case on hand cannot be considered as being accrued or arisen or deemed to accrue or arise in India as the services were rendered outside India and the commission was also paid outside India.
We also hold that in the absence of permanent establishment of ‘A V & Sons’ in India, the income of the said agent is not exigible to tax in India. Therefore, the assessee was not obliged to effect any deduction of tax on the commission payment to the agent ‘A V & Sons’, who is stationed outside India. We, therefore, reverse the findings of the authorities below in this regard and allow the grounds raised in the appeal by the assessee.
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2017 (11) TMI 1843
Withdrawal of Notices of Motion and Chamber Summons - HELD THAT:- Senior Counsel appearing in support of the Chamber Summons and the Notices of Motion, seeks to withdraw all the three applications, with liberty to take such proceedings in law as are available to the Petitioner. Liberty as prayed for granted.
All the applications i.e. two Notices of Motion and Chamber Summons are withdrawn with the aforesaid liberty.
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2017 (11) TMI 1842
Addition u/s 14A - Disallowance of expenditure attributable to earning of tax free income - HELD THAT:- We thus find that the Co-ordinate Bench of the Tribunal had upheld the disallowance u/s 14A of the Act @ 2.5% of gross tax free income. In view of the Ld. AR’s submission that the issue in the year under consideration is similar to A.Y. 2000-01 and 2001-02 [2016 (8) TMI 1449 - ITAT PUNE] and since in those years the issue was decided against the assessee by the Coordinate Bench of the Tribunal, we find no reason to interfere with the order of Ld.CIT(A) and thus the assessee’s ground is dismissed.
Denial of deduction of loss of subsidiary company - HELD THAT:- We find that CIT(A) while upholding the order of AO has noted that during the appellate proceedings the assessee was asked to substantiate the loss by furnishing the copy of contract with any of the subsidiary but the same was not furnished. He has further noted that the presence of any commercial expediency was neither been highlighted nor was proved by the assessee and that merely because of relationship between the two, the payment cannot be allowed as deduction either u/s.37(1) or u/s.28 of the Act. Before us, assessee has not placed any material on record to controvert the findings of CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of Ld.CIT(A) and thus the ground of the assessee is dismissed.
Disallowance of premium in respect of leasehold land - HELD THAT:- Co-ordinate Bench, relying on the decision of Hon’ble Apex Court in the case of Govind Sugar Mills Limited [1997 (7) TMI 16 - SC ORDER] decided the issue against the assessee. Further, in view of the Ld. AR’s submission that the issue in the year under consideration is similar to A.Y. 2000-01 and 2001-02 [2016 (8) TMI 1449 - ITAT PUNE] and since in those years the issue was decided against the assessee, we find no reason to interfere with the order of Ld.CIT(A) and thus the assessee’s ground is dismissed.
Addition made to the contract income - HELD THAT:- Since both the parties have admitted that the facts of the case in the present ground are identical to that of earlier years and since in earlier years, the issue has been decided by Co-ordinate Bench of the Tribunal in assessee’s favour, we therefore following the decision of the coordinate Bench of the Tribunal in assessee’s own case for earlier years and for similar reasons, allow the ground of assessee and thus the assessee’s ground No.4 is allowed and Revenue’s ground No.2 is dismissed.
Disallowing computer software expenses - HELD THAT:- Both the parties have admitted that the facts of the case in the present ground are identical to that of earlier years [2016 (8) TMI 1449 - ITAT PUNE] . In earlier years, the Co-ordinate Bench of the Tribunal has decided the issue against the assessee. We therefore following the decision of the coordinate Bench of the Tribunal in assessee’s own case for earlier years and for similar reasons, find no reason to interfere with the order of Ld.CIT(A)
Disallowance of higher depreciation on plant Nos.4, 8 and 11 wherein it was manufacturing shell type boilers and absorption cooling division - AO was of the view that due to the type of equipments that were manufactured by the assessee with the aforesaid machines, the aforesaid machines per se did not qualify for higher depreciation - HELD THAT:- Since both the parties have admitted that the facts of the case in the present ground are identical to that of earlier years, we therefore following the decision of the coordinate Bench of the Tribunal in assessee’s own case [2016 (8) TMI 1449 - ITAT PUNE] of earlier years and for similar reasons hold that assessee is eligible to claim depreciation @ 100% with respect to plant and machinery used in the manufacture of air / gas / fluid systems but is not eligible for 100% depreciation in respect of plant and machinery used in the manufacture of heat pumps. Thus the ground of assessee is partly allowed.
Addition of prior period expenses - HELD THAT:- CIT(A) while granting partial relief has noted that some of the expenses got crystallized during the year and therefore he directed the AO to allow the same. He also noted that for some of the expenses the relevant invoices, bills, statements etc., were received prior to the relevant previous years and for some of the expenses assessee did not furnish any details or evidence to substantiate the crystallization of the liability during the year under consideration. He further directed the AO to consider the evidence and thereby granted partial relief to the assessee. Before us, assessee has not placed any material on record to controvert the findings of Ld. CIT(A) nor has placed the details of expenditure to substantiate its stand that the liability got crystallised during the year under consideration. Before us, assessee has also not placed the details of expenses. Before us, Revenue has also not placed any material to point out any fallacy in the findings of Ld.CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground No.7 of the assessee is dismissed
Loss of amount on embezzlement - HELD THAT:- It is an undisputed fact that the loss has arisen on account of embezzlement and the Assessee has also filed a police complaint. We find that the H’ble Apex Court in the case of Associated Banking Corporation Of India Ltd. v. CIT [1964 (10) TMI 7 - SUPREME COURT] has observed that the loss by embezzlement must be deemed to have occurred when the assessee came to know about the embezzlement and realised that the amounts embezzled could not be recovered. In the present case, it is not the case of the Revenue that the loss has not arisen during the course of business or is not incidental to business or the view of the assessee that the loss is not recoverable is incorrect. In view of the aforesaid facts, we are of the view that the loss on account of embezzlement is allowable. Since the Ld CIT(A) has already allowed the loss to the extent of ₹ 64,82,136/-, we direct the AO to allow the balance loss - ground of the assessee is allowed.
Disallowance of expenses - HELD THAT:- In the absence of any contrary binding decision in favour of Revenue, we relying on the aforesaid decision of Hon’ble High Court of Gujarat in the case of Sayaji Iron & Engg. Co. [2001 (7) TMI 70 - GUJARAT HIGH COURT] hold that no disallowance of vehicle expenses on account of being personal in nature is called for in the present case. As far as the disallowance of other expenses on adhoc basis is concerned, we find that AO has not pointed out any expenses which are not for the purpose of business. Further it is not in dispute that the assessee’s books of accounts are regularly maintained, audited and no discrepancies have been pointed out by the Auditor or the Revenue. The disallowance has been made on adhoc basis. Before us, assessee has submitted that no such adhoc disallowance has been made in subsequent years in scrutiny proceedings and this fact has not been controverted by Revenue. Considering the totality of the aforesaid facts, we are of the view that no disallowance of expenses on adhoc basis is called for in the present case and thus the ground of the assessee is allowed.
Deduction u/s 80HHC - determination of total turnover - assessee is aggrieved by the inclusion of “trading turnover” in “total turnover” - Revenue is also in appeal against the order of Ld. CIT(A) as exclusion of sales tax and excise duty from total turnover - HELD THAT:- Hon’ble Apex Court in the case of CIT Vs. Catapharma (India) Pvt. Ltd., [2007 (7) TMI 203 - SUPREME COURT] has held that while calculating the deduction under section 80HHC(3)(b) of the Income Tax Act, 1961, for computing the “total turnover” of exports out of India of trading goods, excise duty and sales tax are not to be included. Accordingly, we hold that trading turnover is to be excluded from total turnover also. Sales tax and excise duty is to be excluded from total turnover.
Scrap sales - plea of the assessee is that the scrap is generated during the course of manufacturing. The aforesaid contention of the assessee is not controverted by the Revenue. In such a situation, we find that the ratio of the decision of Hon’ble Apex Court in the case of CIT Vs. Punjab Steel Industries India [2014 (5) TMI 238 - SUPREME COURT] would be applicable to the present facts and therefore the sale of scrap cannot be considered as part of “total turnover” for the purpose of calculation of deduction u/s 80HHC of the Act.
Exchange Difference assessee fairly admitted that the said difference to the extent of sales would form part of the total turnover and the balance needs to be excluded. We find merit in the plea of the assessee that exchange difference to the extent of sales would be included as part of the total turnover. Thus, ground of appeal No.10(a) raised by the assessee is partly allowed and ground of appeal No.6 raised by the Revenue is dismissed.
Disputed adjustments to the export turnover - Business claims and refunds - HELD THAT:- In this regard the amount relates to insurance refund of ₹ 1,15,82,359/-. The issue was remitted back to the AO with direction. We also remit this issue back to the AO to apply the said directions.
Balances written off now recovered - The assessee pointed out that it was part of operational income recovered. Since the expenses when booked were allowed as expenditure, hence, the same is to be considered at cost of export turnover. We find merit in the plea of the assessee in this regard. However once the same is excluded as part of turnover, hence, the same cannot be excluded under Explanation (baa) to Sec.80HHC of the Act.
Settlement of claim of order cancelled - The Explanation (baa) under Sec.80HHC defines the profit of business to mean the profits as computed under the head profits and gains of business to as reduced by 90% of the same referred to in clauses (iii)(a) to (iii)(e) of Sec.28 of the Act beyond any receipts by way of brokerage, claim, interest, rent, charges or any other receipt of similar nature included in such profits. The receipts on account of settlement of claim of order cancellation is in the nature of operational income and cannot be excluded under Explanation (baa) to Sec.80HHC of the Act.
Miscellaneous income - assessee claimed the said income at ₹ 4.39 crore to be part of export turnover. CIT(A) allowed the claim of the assessee to the extent of ₹ 2.29 crores referring the Ld. CIT(A) vide para 24.3 discussed the issue and we find merit in his observations and upheld the order of Ld. CIT(A) regarding miscellaneous income to be excluded. Hence, the ground of appeal No.10(c) is partly allowed.
Exclusion from eligible profits of business, loss / expenses on oversea losses - HELD THAT:- The assessee is aggrieved by the non-exclusion of business losses. In this regard, it was pointed out that profits if any of the representatives of the assessee ought to be excluded u/s 80HHC of the Act, so consequently the losses have to be excluded under Explanation baa (2) of Sec.80HHC of the Act and consequently the profits eligible for claiming the deduction u/s 80HHC of the Act should be increased. We find merit in the plea of the assessee as Explanation (baa) to Sec.80HHC of the Act provides that the profits of any branch office, warehouse or any other establishment of the assessee situated outside India ought to be revised from the profits of business computed under the head of profits and gains of business and profession. Consequently in cases from the any loss of over-seas, branch or office then the same also needs to be excluded and the profits eligible to claim deduction u/s 80HHC of the Act should be increased and we direct so. Thus, ground of appeal No.10(d) is allowed.
Proportionate deduction with reference to its export and on account of (DEPB) - The said issue now stands decided as per the amendment to Section and the AO in this regard is directed to apply the amendment and decide the issue.
Claim of unabsorbed losses u/s 72A - the same may be reduced from the profits of business. The Ld. CIT(A) has decided the said issue relying on the ratio laid down by the Hon’ble Bombay High Court at para 27 page 77, which has not been reversed. Applying the said principle, we dismiss the ground of appeal No.10(f).
Assumption of exchange difference as business income or under the head ‘income from other sources’ - CIT(A) relied and has considered the plea of the assessee and in the absence of details of deductions, has directed the AO to call for the details and examine the same and decide the issue as per his direction and decide the same. We find no merit in the ground of appeal No.11 raised by the assessee in this regard, where the issue has been set aside to the AO for verification. Thus, this ground is dismissed.
Direction to AO to consider the following items of income u/s 80HHC (a) bad debts written off recovered and (b) doubtful debts written off recovered - HELD THAT:- The said issue has been decided against the Revenue by the ratio laid down by the Hon’ble Bombay High Court [2000 (8) TMI 73 - BOMBAY HIGH COURT] Applying the said principle, we direct the AO to allow the claim of the assessee in accordance with the law. AO thus has directed to recompute the deductions available during the assessment u/s 80HHC of the Act after applying the directions of the Tribunal on various aspects of the said deduction i.e., the computation of total turnover and export turnover as directed in the paragraphs hereinabove, while deciding the ground of appeal Nos.10 and 11 raised by the assessee and ground of appeal Nos.5 and 6 raised by the Revenue. We thus adjudicated the said issues in ground of appeal No.10 raised by the assessee.
Charging of interest u/s 234D - A.R. submitted that this ground needs to be decided against assessee as the provisions of Sec.234D were applicable as assessment was completed after 01.06.2003. In view of the submission of Ld.A.R., the ground of assessee is dismissed.
Addition of lease rent on account of accrual basis - accrual of income - HELD THAT:- Applying the three tests laid down by various decisions of this Court, namely, whether the income accrued to the assessee is real or hypothetical; whether there is a corresponding liability of the other party to pass on the benefits of duty free import to the assessee even without any imports having been made; and the probability or improbability of realisation of the benefits by the assessee considered from a realistic and practical point of view (the assessee may not have made imports), it is quite clear that in fact no real income but only hypothetical income had accrued to the assessee and Section 28(iv) of the Act would be inapplicable to the facts and circumstances of the case. Essentially, the AO is required to be pragmatic and not pedantic.
We are of the considered view that this issue needs a revisit to the file of Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) while dealing with the issue in assessment year 2000-01 partly deleted the addition in respect of Parasrampuria Industries Ltd. and Parasrampuria International Ltd. by following the concept of real income and upheld the addition in respect of Modi Alkalies Ltd. and Inertia Industries Ltd. whereas, all the four companies are similarly placed. Accordingly, we deem it appropriate to remit this issue back to the file of Commissioner of Income Tax (Appeals) for deciding the issue afresh, in the light of decision rendered in the case of THERMAX LTD., PUNE [2016 (8) TMI 1449 - ITAT PUNE] and M/S EXCEL INDUSTRIES LTD. AND MAFATLAL INDUSTRIES P. LTD. [2013 (10) TMI 324 - SUPREME COURT]
. The findings of Commissioner of Income Tax (Appeals) on this issue are set aside and the ground No. 7 in the appeal of the assessee and ground No. 4.1 to 4.5 in the appeal of the Revenue for assessment year 2000-01 are allowed for statistical purpose.
We thus find that the Co-ordinate Bench, while deciding the issue in assessee’s own case in earlier year had set aside the issue to the file of Ld.CIT(A). It is also a fact that both the parties have admitted that the issue in the year under consideration is identical to that of earlier years. We therefore following the same reasoning as given by the coordinate Bench of Tribunal while deciding the issue in A.Y.s 2000- 01 and 2001-02 and for similar reasons, restore the issue to the file of Ld.CIT(A). Needless to state that the Ld.CIT(A) shall grant reasonable opportunity of hearing to both the parties. Thus this ground of Revenue is allowed for statistical purpose.
Claim for deduction u/s 80IA - HELD THAT:- In the present case, CIT(A) while deciding the issue has noted that as far as deduction u/s 80IA is concerned, only the losses and unabsorbed depreciation of the eligible business undertaking has to be considered. He therefore after upholding the reliance placed on the decisions referred by assessee held that AO was not justified in setting off of the entire unabsorbed loss of Thermax Water Technologies Company Limited against the profit from eligible business undertaking and in the process computing nil profit u/s 80IA of the Act. Before us, Revenue has not pointed out any fallacy in the findings of Ld.CIT(A) nor has pointed to any contrary binding decision in its support. In such a situation, we find no reason to interfere with order of Ld.CIT(A) and thus, the ground of the Revenue is dismissed.
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2017 (11) TMI 1841
Deduction u/s 80HHC - Allowability of deduction on certain receipts of Scrap sale - HELD THAT:- As decided in PUNJAB STAINLESS STEEL INDUSTRIES [2014 (5) TMI 238 - SUPREME COURT] we are of the view that the view expressed by the High Court is in conformity with the normal accounting practice followed by the traders, including the respondent-assessee and it was justified in coming to a conclusion that the sale of scrap would not be included in the ‘total turnover’.
We find it relevant to direct the AO to apply the said legal proposition of the Apex Court in the case of Punjab Stainless Steel Industries (supra) after examining the facts of the present case. Accordingly, this part of the ground No.2 is allowed for statistical purposes.
Disallowance on account of Aircraft expenditure - HELD THAT:- This is an issue coming up for adjudication almost every assessment year in this case. AO’s disallowed 15% of the claim debited to the Profit and Loss Account consistently towards the personal use of the Aircraft by the Director and their family members. The issue came up for adjudication by the Tribunal in earlier years. The issue was decided against the assessee in all the years.
On hearing both the sides and considering the fair admission of the issue by assessee, we are of the opinion, this ground for this year also has to be decided against the assessee. Accordingly, the ground No.3 is dismissed, and the same is in favour of the Revenue.
Disallowance u/s 14A - HELD THAT:- We are of the opinion, that it is now binding on our Benches that the disallowance in this case should be restricted to 2% of the exempt income. Therefore, we find it relevant to give a direction to the AO to follow the cited decision in the case of Godrej Agrovet Ltd [2014 (8) TMI 457 - BOMBAY HIGH COURT] after examining peculiar facts of the present case. With these directions, we remand this issue to the file of the CIT(A) for fresh adjudication on this issue. Accordingly, the grounds raised by the revenue are allowed for statistical purposes.
Provision for warranty - HELD THAT:- We find similar issue was raised by the revenue for adjudication before us for the A.Y 2005-06 vide ground No.5 of that appeal with identical directions, we remand this issue also to the file of the CIT(A) for fresh decision in the light of Apex Court judgment in the case Rotork Controls India Private Ltd. [2009 (5) TMI 16 - SUPREME COURT] which is relevant for the legal proposition that the estimated provision is allowable when the excess provisions is returned back as an income of the assessee in the later year. We remanded this issue as discussed in the preceding paragraphs above for the file of CIT(A). With identical directions, we remand this issue to the file of the CIT(A). CIT(A) is directed to grant reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. Accordingly, this issue is allowed for statistical purposes.
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2017 (11) TMI 1840
Deemed dividend u/s 2(22) (e) - assessee has taken an advance from M/s. Competent Holding ltd wherein the assessee is a Director and holding beneficial ownership of more than 10% - assessee submitted that the above sum was received by assessee for advance against sale of property therefore, it is a business transaction - whether it is a “trade advance” or not ? - AY 2008-09 - HELD THAT:- Before us assessee has not furnished the Ledger account of the above company in books of the assessee or the Ledger account of the assessee from the books of the company, hence, we are unable to determine the exact amount of trade advances on account of these transaction. Even otherwise if it is accepted that balance of ₹ 70 lakhs paid by the company to the assessee is also part of these transaction, even then a sum of ₹ 23 lakhs is required to be explained by the assessee that they are forming part of the consideration of these “sale agreement” between the assessee and the competent Holdings private limited. Furthermore, the confusion has also arisen because assessee has submitted the copy of the memorandum of understanding dated 1/9/2008 between the assessee and the competent Holdings Ltd wherein in the last paragraph of page No. 1 it has been mentioned that the competent Holdings Ltd has entered into an agreement to sell dated 09/01/2008 with the 1st party to purchase entire basement floor, for a sum of ₹ 1.25 crores and advanced the sum of ₹ 98 lakhs to the 1st party. However, in absence of the Ledger account it cannot be verified that on that particular date i.e. on 1/9/2008 the competent holding Ltd has paid a sum of ₹ 98 lakhs to the assessee or not.
We set aside the issue for verification of the amount received by the assessee in pursuance of this agreement as trade advance to the file of the Ld. assessing officer with a direction that if the assessee has received the above sum after 09/01/2008 up to 31/03/2008 in pursuance of this agreement then such amount cannot be treated as deemed dividend under section 2 (22) (e) of the act. In view of this ground No. 1 and 2 of the appeal of the revenue are set aside to the file of the Ld. Assessing officer with above direction. In the result ground No. 1 and 2 of the appeal of the revenue is partly allowed .
AY 2009-10 - sums of ₹ 60 lakhs are also advance against rent or security deposit for rent. If the amount of ₹ 37 lakhs is clubbed with the transaction of the above commercial transaction of the sale of property between the assessee and the M/s. Competent Holding Ltd than as on 30/03/2009 the assessee is having only loan of ₹ 60.75 Lacs. The assessee has paid back the sum of ₹ 75,000/- to the company on 31/03/2009 leaving deposit of ₹ 60 lakhs as per agreement. Therefore, it is apparent that the whole transaction was the transaction of security deposit with the assessee for use of the property of the assessee on rent as well as to facilitate the mortgage of the assessee’s property for the purpose of loan to the company for purchase of new property. Therefore it cannot be denied that above transactions are transactions of commercial nature between the assessee and the company which are beyond the scope of loans and advances as per provisions of section 2 (22) (e) of the act. In view of the above facts the addition in the hands of the assessee of ₹ 37 lakhs which is less than ₹ 60 lakhs required to be retained by the assessee as security deposit, cannot be made under section 2 (22) (e) of the act. In view of this, the solitary ground in appeal of the assessee is allowed.
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2017 (11) TMI 1839
Exemption u/s 10(23G) - claim to be restricted to the net income derived on account of financing of infrastructure sector and not the gross receipt - AO while computing deduction u/s 10(23G) has presumed that the entire investment for infrastructure was out of borrowed funds - HELD THAT:- Assessing Officer while computing deduction u/s 10(23G) has presumed that the entire investment for infrastructure was out of borrowed funds which according to us is not correct. In our view, only those expenditure directly relatable to the earning of exempt income can be reduced / set–off for computing net income under section 10(32G). We have noted, identical issue came up for consideration before the Co–ordinate Bench in assessee’s own case for the assessment year 1997–98 and 2000–01.
As consistent with the view taken by the Tribunal in preceding assessment year [2016 (4) TMI 648 - ITAT MUMBAI] , we are inclined to restore the matter back to the file of the AO for deciding afresh keeping in view the directions of the Tribunal reproduced herein above. At this stage, we must observe, though, the learned Departmental Representative had submitted before us that the issue relating to part disallowance of administrative expenditure was not considered earlier by the Commissioner (Appeals) and the Tribunal, however, we do not agree with the same. We have noted that in the preceding assessment year, the assessee itself has disallowed 1% out of the administrative expenditure while computing net exempt income under section 10(23G) of the Act. Accordingly, ground no.1 raised by the Revenue corresponding to ground no.2 raised by the assessee are allowed for statistical purposes.
Allocation of interest and other expenditure for earning tax free interest income under section 10(15) - HELD THAT:- As per facts and material on record, surplus interest free funds available with the assessee far exceeds the investment made in tax free interest income yielding assets, therefore, no disallowance of interest expenditure can be made in view of the decision of the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd., 2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT v/s HDFC Bank Ltd., [2014 (8) TMI 119 - BOMBAY HIGH COURT] . As far as disallowance of administrative expenses is concerned, it is the contention of the assessee that in the preceding assessment year, it has voluntarily disallowed 1% of the administrative expenditure attributable to earning of exempt income. However, we have noted, in assessment year 2001–02, the Tribunal while deciding the issue in Revenue’s appeal being [2016 (4) TMI 648 - ITAT MUMBAI] , has restored the issue to the Assessing Officer for considering afresh. In view of the aforesaid, we are inclined to restore the issue to the file of the Assessing Officer for deciding afresh keeping in view the directions of the Tribunal in the preceding assessment year. Thus, ground no.2, raised by the Revenue corresponding to ground no.3, raised by the assessee are allowed for statistical purposes.
Allowability of assessee’s claim of depreciation on leased assets - HELD THAT:- Issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for preceding assessment year as submitted in the paper book. As could be seen from the material on record, in the impugned assessment year, there is no new lease transaction. The assessee has claimed depreciation on its own fixed assets and depreciation claimed on leased assets were continuing from past lease transactions. Notably, in assessment year 1997–98, the Tribunal while deciding the issue in had allowed assessee’s claim of depreciation.
Addition of non–cash right back made u/s 41(4) - HELD THAT:- Issue in assessee's own case for preceding year [2017 (1) TMI 1676 - ITAT MUMBAI] and [2016 (4) TMI 648 - ITAT MUMBAI] restored the issue to the Assessing Officer for considering afresh keeping in view the directions of the Tribunal in the preceding assessment year.
Disallowance of expenditure incurred for earning dividend income - main contention of the assessee against disallowance of interest expenditure is, investment in dividend earning assets were made out of surplus interest free funds available with the assessee - HELD THAT:- We find substantial merit in the aforesaid submissions of AR. If surplus interest free funds are available with the assessee to take care of the investments made in shares giving rise to dividend income, no disallowance of interest expenditure can be made in view of the decision of the Hon'ble Jurisdictional High Court in HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] . As far as managerial / administrative expenditure are concerned, we have noted, in the assessment year 1997–98, the assessee had furnished a working of disallowance of expenditure to be made for earning exempt income wherein, it has quantified the disallowance for administrative expenditure at 1% of the gross exempt income. Notably, in assessment year 2000–01, the Tribunal while deciding identical issue has restored the matter back to the file of the Assessing Officer
Addition on account of bad debt written–off - addition u/s 36(1) - HELD THAT:- We find merit in the submissions of the learned Authorised Representative that after amendment to section 36(1)(vii) from 1st April 1989, once the assessee writes–off the bad debt as irrecoverable in its accounts it will satisfy the condition of the said provisions and the assessee is no more required to establish that the debt has actually become irrecoverable. Hon'ble Supreme Court in TRF Ltd. v/s CIT, [2010 (2) TMI 211 - SUPREME COURT] has expressed this view.
Further, in case of Vijaya Bank Ltd. v/s CIT, [2010 (4) TMI 46 - SUPREME COURT] held that mere debit to the Profit & Loss account is not sufficient to claim write–off as the assessee has to simultaneously reduce the amount from loans and advances or debtors on assets side of the Balance Sheet to claim right–off - we direct the Assessing Officer to allow assessee’s claim in respect of debts which are actually written–off by applying the principle laid down in the decisions referred to above. Further, the Assessing Officer is also required to examine whether there is any claim of write–off of bad debt in the nature of mere provisions, hence, not allowable in terms of section 36(1)(vii) - even if the assessee’s claim of write–off in respect of a particular debt having become bad is allowed in the impugned assessment year, the Revenue is protected under section 41(4) of the Act to bring the amount to tax in case such debt is recovered by the assessee in any subsequent assessment year. With the aforesaid observation, we restore the issue to the file of the Assessing Officer for adjudicating afresh
Addition made to annual letting value towards notional interest - HELD THAT:- Undisputedly, the addition made to the annual letting value towards interest chargeable on security deposit is purely on notional basis. Notably, while deciding identical issue in assessee’s own case [2016 (4) TMI 648 - ITAT MUMBAI] held that AO has not made any enquiry on the issue whether the rent received by the assessee is at actual market rate or not. Therefore, without bringing any evidence on record to demonstrate that the rent received by the assessee is not actual market rate the Assessing Officer cannot add notional interest on the interest free security deposit by treating it as part of the rent received. In this context, we rely upon the ratio laid down by the Hon'ble Jurisdictional High Court in Tip Top Typography [2014 (8) TMI 356 - BOMBAY HIGH COURT].
Addition on account of software expenditure - revenue or capital expenditure - HELD THAT:- AO allowed software maintenance expenditure of ₹ 56,48,58,160, incurred for corporate office, whereas, he disallowed similar expenditure of ₹ 226,33,999 incurred for branches. The claim of the assessee that such expenditure incurred for branches are towards maintenance of software and not for acquiring any new software remains uncontroverted. Moreover, when the Assessing Officer has allowed similar expenditure incurred for corporate office, there is no reason why such expenditure incurred for branches should be disallowed.
Addition on account of club membership fees - allowable revenue expenditure u/s 37 - HELD THAT:- Hon'ble Supreme Court in United Glass Manufacturing Co. ltd., [2012 (9) TMI 914 - Supreme Court] has held that club membership fees for employees are to be treated as business expenditure of a company under section 37 of the Act. We must also observe that in the decisions referred to by Commissioner (Appeals) similar view has been expressed. That being the case, we do not find any reason to interfere with the order of the learned Commissioner (Appeals) on this issue.
Allowance of claim of deduction u/s 36(1)(viia) - HELD THAT:- Assessee is a Scheduled Bank and its accounts are maintained in conformity with the Generally Accepted Accounting Principle (GAAP) in India and the guidelines issued by the RBI from time to time. Further, it is evident from the annual report of the assessee that acquisition of assets including performing and non–performing asset are as per the prescribed guidelines of RBI. That being the case, there is no reason for the Assessing Officer to presume that the assessee is not qualified to exercise option under the first proviso. Further, as per the second proviso to section 36(1)(viia) of the Act for the assessment year commencing on/or after 1st April 2003 and ending before 1st April 2005, the deduction allowable in terms of proviso 1 to section 36(1)(viia) of the Act is 10% instead of 5%. In view of the above, we do not find any infirmity in the order of the learned Commissioner (Appeals) on this issued
MAT applicability on banking companies - computation of book profit u/s 115JB - HELD THAT:- Before the first appellate authority the assessee justified the book profit computed by it. The learned Commissioner (Appeals) after considering the submissions of the assessee directed the Assessing Officer to compute the book profit as worked out by the assessee subject to the modification to be made on account of relief granted to the assessee towards expenditure disallowable under section 14A of the Act. Admittedly, the assessee has not challenged the aforesaid decision of the learned Commissioner (Appeals). DR has also not advanced any substantive argument to defer from the view expressed by the Commissioner (Appeals). In any case of the matter, as per the decision of the Co–ordinate Bench in Krung Thai Bank v/s JDIT, [2010 (9) TMI 18 - ITAT, MUMBAI], and subsequent decisions of different Benches of the Tribunal, provisions of section 115JB AND 115J of the Act are not applicable to banking companies.
Exemption under section 10(23G) - HELD THAT:- A reading of CBDT circular no.762 dated 18th February 1998, makes it clear that even a company which is directly not carrying out development of infrastructure facilities would also be eligible for exemption if invests in shares or providing long term finance to an enterprise engaged in the business of providing infrastructure would be treated as infrastructure capital company. Undisputedly, the assessee has fulfilled the aforesaid condition as it has made investments or has advanced loans to companies engaged in the business of infrastructure development. Therefore, the assessee is eligible for claiming exemption under section 10(23G) of the Act. The decision of the Tribunal, Amritsar Bench, in case of Jammu & Kashmit Bank [2008 (2) TMI 533 - ITAT AMRITSAR], is also applicable to the facts of the present case. Moreover, in the preceding assessment years, the Revenue has never questioned assessee’s eligibility to claim exemption under section 10(23G) of the Act. There being no material difference in fact, a departure cannot be made in the impugned assessment year for disallowing assessee’s claim under section 10(23G) of the Act by questioning its eligibility.
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2017 (11) TMI 1838
TP Adjustment - comparable selection - functinal similarity - HELD THAT:- Accentia' is engaged in diversified activity of medical transcription, medical coding, medical billing, etc. which are different from the activities of the assessee; which is in the nature of call centre and therefore functionally not comparable.
While the TPO has characterized the assessee as an ITES service provider, the DRP has rendered the finding that the assessee provided a mix of ITES and KPO services. In factual matrix of this case as discussed above, we deem it appropriate to remand the issue of determining the functional profits of the assessee back to the file of the TPO for a fresh analysis, to evaluate the finding rendered by the DRP that the services rendered by the assessee are a mix of high end and low end services and also to evaluate the change in the functional profile of the assessee, if any, over the years and to then decide the comparability. Needless to add, the TPO shall provide the assessee adequate opportunity of being heard and make submissions in this regard, which shall be duly considered before taking a decision in the matter
TCS E-Serve Ltd., ('TCS') - examination is necessary to decide whether the conditions/reasons on the basis of which his company was excluded in the earlier year are applicable to the fact situation prevailing in the asst. year under consideration; especially in the context of the finding rendered by the DRP that the assessee in the case on hand was performing various activities that constitute a mix of both high end and low end services. In this view of the matter, we deem it appropriate to remand the matter to the file of the TPO for examination to evaluate the functional profile of the assessee and then decide the comparability.
BNR Udyog Ltd., ('BNR) - According to the assessee, this company carried out both Medical transcription and medical billing and coding and thus performed KPO services also. In our view, this aspect requires examination, particularly in the light of the finding of the DRP that the assessee also performed a mix of high end and low end services. In this view of the matter, we deem it appropriate to remand the matter of comparability of this company, 'BNR', to the file of the TPO for examination and determination of this issue afresh, in line with the above observations made by us.
Infosys BPO Ltd., ('Infosys') shall be excluded from the set of comparables as presence of a brand commands premium price and the customers would be willing to pay, for the services/products of the company. Infosys BPO is an established player who is not only a market leader but also a company employing sheer breadth in terms of economies of scale and diversity and geographical dispersion of customers. The presence of the aforesaid factors will take this company out of the list of comparables
Caliber Point Business Solutions Ltd., (Caliber') - it is not possible to conclude that the results of comparable periods can be extrapolated. In this factual matrix of this case, where such details are absent, the application of the financial year filter is upheld and we accordingly uphold the decision of the TPO in rejecting this company as a comparable.
Cosmic Global Ltd., ('Cosmic') - TPO has not applied the employee cost filter. When the TPO has not applied the employee cost filter in his own comparability analysis, it is not appropriate to reject a company on this filter that was not adopted by him in the first place. The DRP has given its reasoning as to why this employee filter is an appropriate filter for ITES companies. However, in our view, a filter cannot be applied selectively or arbitrarily, as applying a filter could alter the contours of the comparability analysis. In this view of the matter, we deem it appropriate to remand the issue of comparability of this company to the file of the TPO for fresh consideration.
Datamatics Financial Services Ltd.,- 'Datamatics' - except for raising this ground and reiterating that this company, 'Datamatics' is functionally comparable to the assessee in the case on hand, no evidence was brought on record to controvert the observations and findings of the DRP. In this factual matrix of the case, we have no hesitation in upholding the decision of the TPO in rejecting this company, 'Datamatics' as a comparable to the assessee.
ICRA Techno Analytics Ltd., - ('ICRA') - assessee reiterated that this company 'ICRA' is functionally comparable to the assessee in the case on hand, but could not adduce any material/factual evidence to controvert the observations of the DRP. In this factual view of the matter, we uphold the decision of the TPO in rejecting this company as a comparable to the assessee in the case on hand.
Jindal Intellicom Ltd., - ('Jindal') - procedure adopted by the DRP is not proper. This company, 'Jindal', was selected as a comparable by the TPO, which was accepted by the assessee. If the DRP felt that this company had been wrongly selected by the TPO, the least the DRP ought to have done was to have afforded an opportunity to both the assessee and the TPO to explain their stand, in the light of DRP's observations, instead of suo moto excluding this company from the set of comparables. In the fitness of things, the assessee and TPO should be afforded adequate opportunity of being heard in the matter. In this view of the matter, we remand the issue of the comparability of this company 'Jindal' to the file of the DRP to determine the issue afresh after affording both the TPO and the assessee adequate opportunity of being heard in the matter, which shall be duly considered
Adjustment towards notional interest on AE Debtors in excess of 6 months - notional interest on outstanding receivables from AE's - HELD THAT:- Remand this issue back to the file of the TPO/AO for examination as to whether there was any agreement for charging interest on late payments or not and to do a proper comparability analysis, if the adjustment is required to be made after affording the assessee adequate opportunity of being heard in the matter and to file details/submissions in his regard as well as in respect of the alternate ground of benchmarking transactions with LIBOR.
Treatment of Foreign Exchange gain/loss - HELD THAT:- We find that the assessee, in Form No: 35A submitted before the DRP, has furnished certain details on this issue, which does not appear to have been considered by the DRP. In view of the above, we deem it appropriate to remand this issue to the file of the TPO for examination and consideration of the details filed and to decide the issue afresh, as per the principles laid down by the decision of the coordinate bench of this Tribunal in the assessee's own case for asst. year 2009-10 [2016 (3) TMI 356 - ITAT BANGALORE] , after affording the assessee adequate opportunity of being heard in the matter and to file details/submissions required
Computing of Operating Margins - HELD THAT:- While the assessee has raised this issue before the DRP, and the DRP has rejected the assessee's claims on the ground that the details of miscellaneous income were not furnished and therefore the assessee was not able to demonstrate that these were earned in the normal course of business. No details in respect of miscellaneous income have been filed by the assessee before us also in order to support is claim that miscellaneous income formed part of the operational income. In the absence of any details being filed by the assessee to prove its claim with material evidence, we are of the view that the assessee's contention/claim has been rightly rejected and we therefore uphold the decision of the authorities below
Risk Adjustment - HELD THAT:- The issue of risk adjustment has been considered in several decisions of co-ordinate benches of this Tribunal wherein it has been held that as a matter of principle, risk adjustment needs to be granted. However, we find that in the case on hand the assessee has not furnished any details of the risk adjustment it seeks. In the absence of details/working/computation of the risk adjustment sought being filed by the assessee, the claim of risk adjustment is only an academic exercise and therefore we are not inclined to grant any such hypothetical adjustment. In this factual matrix of the matter, as discussed above, we dismiss this claim raised by the assessee for grant of risk adjustment
Working capital adjustment - HELD THAT:- From the details before us, it is not clear whether the negative working capital has been arrived at based on wrong computation. Before us also, the assessee has not filed any details in this regard. In this factual nature of the case, as discussed above, we remand the issue of computation of working capital adjustment to the file of the of the TPO, with a direction to grant working capital adjustment, as per law, keeping in mind the judicial pronouncement of case of Adeptec (India) Pvt. Ltd. [2015 (6) TMI 288 - ITAT HYDERABAD] on the issue of negative working capital.
Charging of interest u/s. 234B and 234C - assessee denies itself liable to be charged interest u/s. 234B and 234C - HELD THAT:- The changing of interest in consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of CIT v. Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and we therefore uphold the action of the AO in charging the said interest. The AO is, however, directed to re-compute the interest chargeable u/s. 234B and 234C of the Act, if any, while giving effect to this order.
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2017 (11) TMI 1837
Defective memorandum of the appeal - Appellate Court not able to understand the nature of the grievance in the appeal - Non registering defective appeal - HELD THAT:- Out of nine appeals, six appeals were preferred by the assessee and three appeals were preferred by the revenue. If the appellant - revenue is aggrieved by the impugned judgment and order in all nine appeals by the Appellate Tribunal, the appellant ought to have filed nine separate appeals. In fact it was duty of the appellant to mention in the Memorandum of Appeal, the specific appeal number before the Tribunal in respect of which the present appeal is preferred. Paragraph 5 of the memorandum of the appeal does not refer to such appeal number.
In fact, the Registry ought not to have registered these appeals and an objection to that effect ought to have been raised. The memorandum of appeal should be drafted in such a manner that the Appellate Court is able to understand the nature of the grievance in the appeal. If the Appellate Tribunal has decided more than one appeals, the memorandum of appeal before the High Court must state the appeal number before the Appellate Tribunal in respect of which the appellant has a grievance in the appeal preferred before this Court.
A copy of this order shall be forwarded to the Prothonotary and Senior Master who shall ensure that such defective appeals are not registered.
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2017 (11) TMI 1836
Rectification u/s 254 - HELD THAT:- CIT (A) after considering the rival submissions had held that in the light of the decision of Hon'ble Supreme Court in the case of CIT v. Woodward Governer India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] the foreign exchange loss on trading transactions have to be allowed as business loss.
CIT (A) directed the AO to allow the loss on realized transaction of foreign exchange as business loss and with regard to quantification of the realized loss, the AO was further directed to recalculate the total amount of realized loss.
As regards the claim of unrealized loss, the CIT (A) agreed with the contention of the AO that it is a contingent liability because it is not ascertainable as to at what exchange rate the transactions of foreign exchange will be realized. Therefore considering the nature of such loss of mark to market basis was disallowed and it was held that the same can only be allowed at the time of actual realization of such loss. The bench after considering the order of revenue authorities had dismissed the appeal of the assessee and uphold the order of CIT (A), therefore there was no mistake in interpreting the judgment of Hon'ble Supreme Court.
No glaring, obvious or patent mistake has been pointed out by the assessee which is apparent from the record, therefore we are inclined to dismiss the MA filed by the assessee.
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2017 (11) TMI 1835
Depreciation on goodwill - depreciation not been claimed in the return of income - HELD THAT:- On perusal of the above provision of Explanation 5 to Sec.32(1) it is clear that even if the assessee had not claimed any deduction in respect of depreciation in computing the total income, the deduction is allowable as per the provisions of S.32(1) . We, therefore, do not see any valid ground to interfere with the findings given by the Ld.CIT(Appeals). Hence, the departmental appeal is dismissed.
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2017 (11) TMI 1834
Prohibited goods or not - Betel Nuts - Confiscation - it was alleged that declared CIF value is less than ₹ 110 per Kilogram specified for Free Import by DGFT in the Notification No. 12(RE- 2013)/2009-2014 dt. 13/05/2013 - HELD THAT:- The question whether the betel nuts are liable for confiscation by declaring value which were lesser than the price fixed by the DGFT in the Notification, came up before the Hyderabad Bench of this Tribunal in the case of International Seaport Dredging Ltd. v. C.C. & S.T., Visakhapatnam [ 2016 (11) TMI 176 - CESTAT HYDERABAD ]. The Tribunal took the view that inasmuch as the goods were cleared after collecting duty on the basis of the tariff value, it cannot be held that the goods are prohibited.
The betel nuts which were imported by declaring prices which were lesser than the minimum import price specified by the DGFT cannot be held as import of prohibited goods. Consequently, the confiscation of the goods is set aside along with the order for payment of redemption fine and penalty. However, the duty paid as per the tariff value is upheld - Appeal allowed in part.
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2017 (11) TMI 1833
Whether the noodles can be held to be misbranded because of the positive test of MSG? - HELD THAT:- As per language of Rule 42 (s) of the Rules, in my considered view the word "added" has great significance. The aforestated declaration is required only when MSG is added from outside source in a particular food product and such declaration is not required when MSG is present in the food product in natural form. A Public Analyst can describe a food product misbranded in terms of Rule 42 (S) of the Rules only when he gives a definite finding based on test-results that MSG is added in the food product from outside source.
Prosecution of the petitioner for violation of Rule 42(S) of the rules - HELD THAT:- The Public Analyst has not clarified in its report whether the MSG in the sample is added from outside or it is naturally present in the product. Therefore, if the sample tested positive for MSG, it cannot be made a ground for prosecution of the petitioner for violation of Rule 42(S) of the rules in view of underlined portions of the said order.
It is settled law that a criminal liability of transferor company into the tranferee company cannot be transferred or fastened on transferee company upon its amalgamation, because with the amalgamation, the transferor company suffers a civil death and it is ceased to exist. In the present case, the offence is occurred on 21.12.1996 and the Brooke Bond Lipton India Ltd merged with the Hindustan Lever Ltd on 20.3.1997. Thus, the Brooke Bond Lipton India Co. Ltd. committed the alleged offence before its merger with the petitioner Hindustan Lever India Co. Ltd. Consequently, the petitioner cannot be prosecuted.
The petitioner cannot be prosecuted for the charges as mentioned in the complaint. Therefore, I allow this petition and quash the complaint and the subsequent proceedings in Criminal Case No.2473 of 2007 in respect of the petitioner "only" in exercise of powers under Section 482 Cr.P.C.
Petition allowed.
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2017 (11) TMI 1832
Deduction u/s 10A - direction of the DRP to delete the addition made by the AO reducing the implementation expenditure and internet connectivity charges from the export turnover only for the purpose of deduction u/s 10A - HELD THAT:- Both the parties agreed that this issue is covered in favour of the assessee by the decision Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it has been held that if any expenditure is excluded from the export turnover, then the same should also be excluded from the total turnover while computing the deduction u/s 10A of the Act and the DRP has followed similar decisions to direct the AO to reduce the same from the total turnover as well.
TP Adjustment - consider internal TNMM also for benchmarking of the assessee’s international transactions - HELD THAT:- In view of the decisions in the assessee’s own case. [2016 (10) TMI 1266 - ITAT HYDERABAD] , we direct the AO to consider only the segmental results of the AEs transactions and also consider the internal TNMM for the purpose of bench marking assessee’s transactions of software development services before arriving at the ALP.
Reimbursement of expenses on cost to cost basis - HELD THAT:- In the earlier A.Y, the TPO had included the reimbursement of cost to the operating cost of the international transaction for arriving at the ALP, but in the relevant A.Y, the AO treated it as a separate international transaction and has added a markup of 10% to make the adjustment. We find that, before the TPO, the assessee has made detailed submissions that the reimbursement of the expenditure is done both by the assessee as well as its AEs without any in markup and therefore, there should not be any adjustment on such account. He submitted that this reimbursement of expenditure is mostly on the travel cost of the deputed employees both of the assessee as well as its AEs.
In view of the decision of the Coordinate Bench in the assessee’s own case in the earlier A.Ys on similar set of facts, we hold that the reimbursement of expenditure cannot be treated as a separate international transaction with a markup on the same. Therefore, the adjustment on account of such transaction is deleted.
Addition/adjustment made on account of corporate guarantee fee - HELD THAT:- We find that this issue is covered in favour of the assessee by the decision of the various Benches of the Tribunal and particularly in the case of Rain Cements [2017 (11) TMI 1750 - ITAT HYDERABAD] wherein it has been held that the amended provision is applicable only w.e.f. A.Y 2013-14 and not for the period prior thereto. Both of us i.e. A.M and JM are signatory to the said decision. Therefore, we allow this ground of appeal and delete the addition/adjustment made on account of corporate guarantee fee.
Deduction u/s 10A - net income from sale of 3rd party licenses was credited to the P&L A/c. - AO observed that the profit derived from trading of 3rd party license is not the profit derived from the software development and export, the same is eligible for deduction u/s 10A and is therefore, to be excluded from the profit eligible for deduction u/s 10A - HELD THAT:- Except for relying on the contentions made before the AO, the learned Counsel for the assessee has not been able to demonstrate as to how it will be eligible for deduction u/s 10A or as to how it is derived from software development and export. Since the same has been excluded both from the export as well as from the total turnover, the net result is “Nil” and there is no prejudice caused to the assessee. In view of the same, we do not see any reason to interfere with the order of the AO on this issue and the assessee’s ground of appeal rejected.
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2017 (11) TMI 1831
Levy of penalty u/s 271(1)(c) - addition on account of cash deposits treating the same as unexplained - HELD THAT:- In the present case the explanation offered by the assessee in quantum proceedings could not be adequately substantiated by him but this fact alone would not automatically lead to the levy of penalty. Penalty proceedings being separate and distinct from assessment proceedings the assessee is entitled to give all possible explanations in support of his contentions.
As observed earlier by us, the findings in quantum proceedings will not operate as res judicata. The assessee cannot be stopped from raising new contentions which he had not raised in quantum proceedings. CIT(Appeals), in the present case, we hold, ought to have considered the alternate explanation given by the assessee regarding the source of cash deposited in his bank, before adjudicating on the levy of penalty. We, therefore, consider it fit to restore the matter back to the file of the CIT(Appeals) to consider the explanation offered by the assessee and thereafter decide the issue in accordance with law. We may add that the assessee be given due opportunity of hearing in this regard. Appeal of the assessee stands allowed for statistical purposes
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2017 (11) TMI 1830
The Supreme Court of India in 2017 (11) TMI 1830 - SC Order, condoned delay, granted leave, and tagged the case with C.A. No. 17532/2017. Justices R. K. Agrawal and Abhay Manohar Sapre presided over the case. The petitioner was represented by Ms. Pinky Anand, ASG, and other advocates.
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