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Showing 381 to 400 of 1439 Records
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2015 (7) TMI 1063
Disallowance u/s 43B - delay in payment - retrospectivity - ITAT allowed the claim - Held that:- Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT ], whereby held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT V. Amil Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT ] held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003.
In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the above-said decisions, we find no reason to differ with the findings of the Tribunal. - Decided against revenue
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2015 (7) TMI 1062
Exclusion of labour charges received from the profits of the business while calculating deduction u/.s 10A - Held that:- Respectfully following the decision of the Special Bench in the case of Maral Overseas [2012 (4) TMI 345 - ITAT INDORE ], it can be safely concluded that the labour charges received are eligible for calculation of deduction u/s. 10A of the Act.
Exclusion of interest received on fixed assets as profit of the business while calculating deduction u/s. 10A Held that:- A perusal of the balance sheet of the assessee shows that the fixed deposit account is shown as secured against bank guarantee which shows that the fixed deposits have a direct nexus with the business of the assessee. In our considered view, the interest earned from such deposits of the money kept apart for the purpose of business is to be taxed under the head ‘Income from business’ and cannot be taxed under ‘Income from other sources’. We draw support from the decision of the Hon’ble Bombay High Court in the case of Indo Swiss [2005 (9) TMI 47 - BOMBAY High Court ]. We, accordingly direct the AO to treat the interest income under the head ‘Profits and gains of the business’ and for the reasons given in ground No. 1 of this appeal, we direct the AO to allow deduction u/s. 10A of the Act
Exclusion of interest received on EEFC while calculating deduction u/s. 10A - Held that:- It is not in dispute that ₹ 35,86,248/- is not interest earned but gain on the fluctuation of foreign exchange. From the chart exhibited at page-24, we find that the assessee has suffered losses on foreign exchange fluctuation which have been accepted by the Revenue authorities. We, therefore, do not find any reason for giving differential treatment to the exchange gains. In our considered opinion, the exchange gains should be taxed under the head business income. We, accordingly direct the AO to tax the exchange gain under the head business income and accordingly allow deduction u/s. 10A of the Act.
Excluding the exemption allowable u/s. 10A from the Book Profit taxable u/s. 115JB - Held that:- Income of units located SEZ will not be included while computing book profit for the purpose of MAT as per section 115JB(6) of the Act. In view of above, we are of the considered view that there is merit in the contention of ld A.R. that irrespective of the fact that amendment has been made in clause (f) of Explanation (1) to section 115JB(2) of the Act to apply the provisions of MAT in respect of units which are entitled to deduction u/s.10A or 10B but the units which are in SEZ will continue to get benefits from the applicability of provisions of MAT in view of sub-section(6) of the Act. We also observe that benefit given to SEZ unit from the applicability of provisions of section 115JB has been withdrawn by the Finance Act, 2011 by inserting a proviso to section 115JB(6) of the Act. Thus we direct the AO to exclude the exemption allowable u/s/.10A from the Book Profit taxable u/s. 115JB of the Act.
Non-exclusion of the Fringe Benefit Tax from the book profit taxable u/s. 115JB - Held that:- FBT is a liability qua employer. It is an expenditure laid out or expended wholly and exclusively for the purposes of the business or profession of the employer. However, subclause( ic) of clause (a) of Sec. 40 of the IncomeTax Act expressly prohibits the deduction of the amount of FBT paid, for the purposes of computing the income under the head “Profits and gains of business or profession”. This prohibition does not apply to the computation of “Book profit”for the purpose of Sec. 115JB. Accordingly, the FBT is an allowable deduction in the computation of ‘Book Profit” u/s 115JB of the Income-tax Act
Levy of interest u/s. 234C - Held that:- A perusal of Sec. 234C of the Act shows that the interest has to be charged on the tax due on the returned income. The AO is accordingly directed to charge interest on the returned income of the assessee.
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2015 (7) TMI 1061
Classification of the switches and stator panel - invoking extended period of limitation - Held that:- A perusal of the show cause notice and the adjudicating order does not reveal there has been any allegation or finding of wilful misstatement or suppression of facts by the petitioner inasmuch as it was not disputed that the detailed functioning of the switches and stator panel was obtained from the petitioner subsequently. The classification made by the petitioner not having been demonstrated to be a wilful mis-statement or there being wilful suppression of facts with regard thereto, this Court finds that the challenge of the petitioner succeeds. The show cause notice dated 9th February, 1994 and the order in original dated 30th November, 2005 are set aside. Mr. Bharadwaj had submitted that the show cause and the order in original could not be set aside since the appellate order was duly made and therefore cannot operate in a vacuum. The point thus raised has also been answered by the Supreme Court in Mohammad Nooh (1957 (9) TMI 42 - SUPREME COURT).
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2015 (7) TMI 1060
Application for early hearing - evidence of credibility of bringing gold - Adjudicating authority has made absolute confiscation of the gold and cross-examination was denied by Commissioner (Appeals). - Considering the prayer, EH application is allowed.
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2015 (7) TMI 1059
Issues involved:
1. Recalling the order of Tribunal in ITA No. 890/PN/2011 for assessment year 2007-08.
2. Adjudicating both the appeals of the Revenue and the assessee arising from the same order of the Commissioner of Income Tax (Appeals) together.
Detailed Analysis:
1. The Miscellaneous Application was filed by the assessee to recall the order of the Tribunal in ITA No. 890/PN/2011 for assessment year 2007-08. The assessee had also filed an appeal against the same order in ITA No. 814/PN/2011. Both appeals were listed before the Tribunal, where the appeal of the assessee was dismissed for non-prosecution. A subsequent Miscellaneous Application was filed by the assessee, which was allowed, and the appeal was directed to be listed for hearing. The Department confirmed that no appeal had been filed against the Tribunal's order, and they had no objection to recalling the order. The Tribunal, considering that both appeals arose from the same order, decided to recall the order of the Tribunal dated 31-12-2012 in ITA No. 890/PN/2011.
2. The Tribunal noted that the appeal of the Revenue and the appeal of the assessee were arising out of the same order of the Commissioner of Income Tax (Appeals) and needed to be adjudicated together. The appeal of the assessee was listed for hearing separately, and the Tribunal directed the registry to list both appeals together. Consequently, the Miscellaneous Application was allowed, and the order was pronounced in favor of recalling the Tribunal's order in ITA No. 890/PN/2011 for assessment year 2007-08.
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2015 (7) TMI 1058
Compute the depreciation @ 80% on WDV of windmill, which in turn is closing WDV of the preceding year. The assessee admittedly, has not installed any other windmill in the instant year. The grounds of appeal raised by the assessee are allowed in assessment year 2008-09.
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2015 (7) TMI 1057
Issues:
Challenge to assessment order jurisdiction and authority of law, classification of goods for taxation purposes, availability of statutory appeal as a remedy.
Analysis:
The writ petition was filed to challenge the assessment order passed by the Commercial Tax Officer, questioning its jurisdiction and authority of law. The petitioner, represented by its Managing Director, argued that the respondent wrongly classified the goods, specifically "maize," under Entry 67-A(ag) of Part 'B' of the First Schedule for taxation at 5%. The petitioner contended that since the maize was sold as second quality, it should have been exempt from tax. On the other hand, the Government Advocate (Taxes) for the respondent opposed the petition, stating that the classification of goods can only be determined by the appellate authority based on relevant circulars and documents.
The Court acknowledged the submission made by the Government Advocate and refrained from delving into the merits of the case. The Court emphasized that the petitioner has a more suitable and effective remedy available, which is to file a statutory appeal against the impugned order. Consequently, the Court dismissed the writ petition without examining the substance of the matter and instructed the petitioner to approach the appellate authority within three weeks from receiving a copy of the order. The Court also dismissed M.P.No.1 of 2015 and did not impose any costs on the parties involved.
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2015 (7) TMI 1056
Addition on account of Bank Interest and Charges, Interest on FDR and Figures of credit in P/L Account - enhancement of income by CIT(A) - Held that:- We find that it is stated by the assessee before CIT (A) that the books were lost when the same were being taken to the place of the counsel of the assessee for preparation of appeal. Copy of FIR is also filed before CIT (A). We feel that under these facts, the assessee was not in a position to bring necessary evidence on record in support of its contentions against the additions made by the A.O. and also against the enhancement proposed by CIT (A). Hence, we feel that under these peculiar facts, it is fit and proper to uphold the additions made by the A.O. but to delete the enhancement of ₹ 35 Lacs made by CIT (A) because in the absence of books, best judgment assessment should be made and it was made by the A.O. We hold accordingly. - Decided partly in favour of assessee
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2015 (7) TMI 1055
Principles of natural justice - Different authorities - Revision u/s 27(3) of the TNVAT Act by levying tax in addition to the output tax already declared in the monthly returns, and imposed penalty - works contract - the interstate movement of goods from other States to Tamil Nadu was occasioned by the work order placed by TWAD Board on the petitioner. - Held that:- It is an admitted position that the notice was issued by one personnel and after hearing the impugned assessment order was passed by another personnel. In such circumstances, before passing the impugned order, the petitioner ought to have been given a personal hearing by the respondent as contemplated under section 22(4) of the TNVAT Act, 2006. Therefore, on this ground of violation of principles of natural justice, I am inclined to set aside the impugned assessment order and accordingly, the same is set aside and the Writ Petition is allowed - Matter remanded back.
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2015 (7) TMI 1054
TDS u/s 194J - Non deduction of TDS - disallowance of transaction charges and lease line charges paid to National Stock Exchange/Bombay Stock Exchange - Held that:- In the past assessment years i.e upto assessment year 2004-05, neither assessee deducted tax at source on transaction charges paid to stock exchange and nor Revenue had raised any objection u/s 40(a)(ia) of the Act; and, the action taken u/s 40(a)(ia) of the Act in assessment year 2005-06 by the Assessing Officer was also set aside by the CIT(A). In the background of aforesaid peculiar circumstances, we are inclined to uphold the plea of assessee that no fault can be found with the action of assessee in not deducting tax at source u/s 194J of the Act in the instant assessment year and thus the invoking of section 40(a)(ia) of the Act is liable to be set aside. It is also undisputed that assessee has started deducting tax at source u/s 194J of the Act on the transaction charges paid to the stock exchange from July 2006 onwards. Considering the aforesaid peculiar facts, and following the parity of reasoning laid down by the Hon’ble Bombay High Court in the case of Kotak Securities Ltd. (2011 (10) TMI 24 - Bombay High Court ), the disallowance made by invoking section 40(a)(ia) of the Act is hereby deleted.- Decided in favour of assessee.
Insofar as the payment of lease line charges to stock exchanges is concerned, following the Judgment of the Hon’ble Bombay High Court in the case of ITO Vs. Angel Capital & Debit Market Ltd [2014 (5) TMI 584 - BOMBAY HIGH COURT ] it has to be held that such payments were merely reimbursement of the charges paid/payable to the stock exchange to the Department of Telecommunication (DOT) and, therefore, it does not have any element of income which would require deduction of tax at source. In view of the aforesaid, the action taken by the Assessing Officer u/s 40(a)(ia) of the Act, is impermissible and is accordingly set aside. - Decided in favour of assessee.
Disallowance representing loss on account of error trades - Held that:- The impugned loss suffered by the assessee on account of client errors, dealing errors or sale errors is incurred in the ordinary course of its business and being incidental to its business activity, deserves to be allowed as a business loss - Decided in favour of assessee.
Denial of depreciation on Motor Car - the Motor vehicle was not registered in the name of assessee company - Held that:- Quite clearly, the facts emerging from the order of the Assessing Officer establish that the said Motor Car was acquired by the assessee in the immediately preceding year though it has been registered in the name of another group concern under the Motor Vehicles Act, 1988. There is no denying the fact that the assessee has paid full price for acquiring the Motor vehicle and it has been using the same for its business. In the year under consideration, assessee has claimed depreciation on written down value (WDV) of Motor vehicle and the same, in our view, cannot be denied following the Judgment of Hon’ble Bombay High Court in the case of Dilip Singh Saradarsingh Bagga (1992 (9) TMI 74 - BOMBAY High Court). Thus we direct the Assessing Officer to allow depreciation to the assessee on the WDV of the Motor Vehicle in question - Decided in favour of assessee.
Disallowance of club entry fees and subscription charges - Held that:- In the assessee’s own case for assessment year 2002-03, the Tribunal has allowed the claim of assessee following the Judgment of Hon’ble Supreme Court in the case of CIT Vs. United Glass Manufacturing Co. Ltd [2012 (9) TMI 914 - SUPREME COURT] - Decided in favour of assessee.
Disallowance of client entertainment expenses - Held that:- We have considered the objections put forth by the assessee and find that the disallowance made by the Assessing Officer is based on pure conjectures and surmises. Apart from making a very generalized observation, the Assessing Officer has not pointed out any particular instance which could demonstrate that the expenditure was incurred for any non business purpose. It is also not the case of Revenue that the explanation furnished by the assessee in the course of assessment proceedings was lacking in any manner. Therefore, we direct the Assessing Officer to delete the addition - Decided in favour of assessee.
Transfer pricing adjustment - Held that:- d, it is abundantly clear that the methodology proposed by the assessee is more appropriate than the manner in which the adjustment for the difference on account of interest earned in the respective segments of related and unrelated parties has been allowed by the TPO. Therefore, we deem it fit and proper to direct the Assessing Officer to verify the working of additional interest earned on account of high volume of trades for related party trades and, thereafter, he shall factor-in such difference in the internal CUP data for the purposes of bench-marking the international transaction of provision of broking services for Futures & Options trades. Needless to say, the Assessing Officer shall allow the assessee an appropriate opportunity of being heard before re-working the arm’s length price of the international transaction of provision of broking services of Futures & Options trades for the aforesaid limited extent
Determination of arm’s length price of international transactions pertaining to merchant banking services rendered by the assessee to its associated enterprises - Held that:- We direct the Assessing Officer to exclude Sundaram Finance Distribution Limited from the final set of comparables and, thereafter, re-work the arm’s length price of the international transaction relating to the provision of marketing and support services to associated enterprises in relation to ADR services. Thus, on this aspect assessee succeeds.
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2015 (7) TMI 1053
Beneficiary of the provisions of Section 80-IA(4) - whether the assessee could be said to be a developer of such project? - Held that:- The authorities below on facts came to the conclusion that the assessee could be said to be a developer as contemplated by Section 80-IA(4). We have perused both the judgments and noticed that the authorities below have considered facts quite meticulously by minutely going through the terms of the contract and came to an unanimous conclusion that the assessee was a developer of the project. - Decided in favour of assessee
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2015 (7) TMI 1052
Unexplained investments in relation to jewellery found during the course of search action - Held that:- if the difference in weight is ignored the description of the items of the jewellery almost tallied with that of the items already declared by the assessee. Moreover the overall weight of jewellery already declared by the assessee in her books of accounts is more than that of the jewellery found during the course of search action. In view of the above stated facts it cannot be said in this case that the jewellery found during the search action was unexplained. The additions thus in this case are not warranted and the same are ordered to be deleted. - Decided in favour of assessee
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2015 (7) TMI 1051
Transfer pricing adjustment - Held that:- Accentia Technologies Ltd. (included by the TPO) be excluded from the list of comparables on account of its strategy to acquire companies for inorganic growth and also on account of absence of segmental information for ascertaining the comparability.
Coral Hub and Cosmic Global Hub,should be excluded from the list of final list and have benchmarking its financial transactions having significant intangible assets like goodwill, intellectual property and technical know-how, whose value is approximately 48.5% of its net block
Cross Domain Solutions Pvt Ltd.website of the said company, suggests that Crossdomain is mainly engaged in providing niche and high-end services in the nature of re-engineered payroll services, which ranges from high-end KPO Services, development of products, IT consulting services etc. Further in following cases, this company has held to be not comparable with ITeS companies.
Genesys International Corporation Ltd (‘Genesys’)’is functionally entirely different from the assessee and hence it cannot be included in the final list of comparables for comparability analysis.
Informed Technologies India Ltd revenues in subsequent years have increased and criteria adopted by the TPO as its sales are on decline cannot be held to be reason for its exclusion. Further, its income from ITES is 99.57% and, therefore, it is a fit case of being comparable company. Regarding turnover filter of less than 5 crores adopted by the TPO, he made his detailed submissions and submitted that the said company should be included in the final comparability.
R. Systems International Ltd. (Segmental) - the BPO segment of R Segment should be included in the sales of all financial comparables.
Micro Genetic System Ltd. company is engaged in the provision of IT enabled services, which is functionally similar, therefore, this company should be included in the list of final comparables.
Fortune InfoTech Ltd. is not undergoing a phase of diminishing revenues. Thus, this company cannot be excluded on the grounds taken by the TPO.
Microland Ltd. company has separately reported ITES segment in accordance with the requirements of AS-17, issued by ICAI which clearly states that the purpose of segmental reporting is to determine the profitability of group of services that are subject to different rates of profitability, opportunities of growth, future prospects and risks. The accounts of the company have been duly audited and therefore, TPO cannot question the authenticity of the audited financial year statement as he has not provided any evidence to support his contentions.
Transfer pricing adjustment on account of transfer of equity shares - Held that:- the valuation of the shares has to be done correctly so as to determine the actual arms length price and for this purpose both the party agree before us that “DCF method” can be applied. Since it has been pointed out before us that there are several flaws and defects in the TPO’s methodology and certain factual corrections need to be done, therefore we are of the opinion that this aspect needs to be examined again. The assessee had valued the shares as per DCF method at ₹ 84.63 the working of each has been given in pages 386 of the paper book and 1/3rd of value of assessee’s share comes to ₹ 28 to ₹ 29, if swap ratio of 1:3 is taken into account. Accordingly, we direct the Assessing Officer to verify the working given by the assessee as per DCF Method and determine the correct value of shares and thereafter make suitable adjustments if required. Thus, this issue is restored back to the file of the Assessing Officer for the purpose of verification and examination of the valuation as per the DCF method. The assessee should be given an opportunity to explain the correct figures and valuation. - Decided in favour of assessee for statistical purpose.
Adjustment on account of corporate guarantee fee - Held that:- the Tribunal in various cases has accepted guarantee commission chargeable between 0.5% to 1%, we hold that guarantee commission of 1% should be chargeable. Here in this case, assessee itself has agreed to charge guarantee commission @ 1% of the outstanding guaranteed amount, accordingly, we also hold that a guarantee commission should be benchmark by taking the rate of 1% of the outstanding guaranteed amount in line with the consistent views taken by the coordinate Benches, from its AE and adjustments should be made accordingly. - Decided partly in favour of assessee.
Adjustment on account of subscription and redemption of preference shares - Held that:- The TPO /Assessing Officer cannot disregarded any apparent transaction and substitute it, without any material of exception circumstance highlighting that assessee has tried to conceal the real transaction or some sham transaction has been unearthed. The TPO cannot question the commercial expediency of the transaction entered into by the assessee unless there are evidence and circumstances to doubt. Here it is a case of investment in shares and it cannot be given different colour so as to expand the scope of transfer pricing adjustments by re-characterizing it as interest free loan. Now, whether in a third party scenario, if an independent enterprise subscribes to a share, can it be characterize as loan. If not, then this transaction also cannot be inferred as loan. Thus subscription of shares cannot be characterizes as loan and therefore no interest should be imputed by treating it as a loan. Accordingly, on this ground alone, we delete the adjustment of interest made by the Assessing Officer.- Decided in favour of assessee.
Adjustment on account of interest on advance given to the AE - Held that:- The assessee has filed copies of invoices relating to payment of Advisory Services rendered by the South African based Consultants, for acquiring prospective companies for acquisition in South Africa. This was a cost incurred towards hiring of the consultants and was in the nature of expenditure. Such an expenditure has been booked in the profit and loss account also in the subsequent year, therefore, such an advance given in this year cannot be treated as a loan so as to impute interest thereon. It is purely for business and commercial consideration and hence no interest can be charged on such advance/expenses. Accordingly, the adjustment of interest made by the AO is directed to be deleted - Decided in favour of assessee.
Disallowance of assessee’s claim for carry forward and set off unabsorbed depreciation allowance and business loss - Held that:- Section 79 has only an overriding effect so far as Chapter VI is concerned, however, section 72A(4) has an overriding effect over any other provisions of the Income Tax Act including that of section 79 because it is a special provision applicable only for amalgamation and demerger. Thus, the assessee would be entitled for claim of set off of carried forward un-accumulated business loss and unabsorbed depreciation of GVPL. So far as the fact that the Assessing Officer has disallowed the carry forward of business loss for the AY 2003-04 in the case of GVPL, now claimed by the assessee after demerger, it appears that he has not taken into effect the subsequent appellate orders which has been affirmed from the stage of Delhi High Court. As a result of such orders substantial relief has been allowed to the GVPL, which will result into revise claim of business losses and unabsorbed depreciation. Accordingly, the Assessing Officer is directed to verify the said effect of appellate orders and to give consequential relief to the assessee and allow the business losses and unabsorbed depreciation allowance of GVPL in the hands of the assessee company in accordance with section 72A(4) - Decided in favour of assessee.
Disallowance claim of depreciation on account of stamp duty capitalized by the assessee - Held that:- Since the stamp duty is the actual cost incurred by the assessee in order to purchase the asset, therefore, it acquires the character of a cost of the capital asset and hence becomes the part of the value of the capital asset acquired. The Hon’ble Supreme Court in the case of Challapalli Sugars Ltd vs CIT, reported in [1974 (10) TMI 3 - SUPREME Court ] had held that the accepted Accountancy Rules for determining the cost of fixed assets is to include all the expenditure necessary to bring such asset into existence and put to them in working condition. Thus, the payment of stamp duty is a cost which is directly attributable to the acquisition of an asset and as per Accounting Standard-10 the same should be included in the cost of fixed assets and, therefore, being part of the capital asset, the assessee is entitled for depreciation. - Decided in favour of assessee.
Addition on account of mismatch between Annual Information Report (AIR) and the revenue reported by the assessee - Held that:- The gross income offered by the assessee also far exceeds the amount appearing in the AIR. That apart the assessee’s books of account have been duly audited and no discrepancy as such have been found by the Assessing Officer, that any transaction has not been entered by the assessee. If the assessee had categorically denied any transaction with those two parties by showing it from its own records, then the onus heavily lies upon the Department to show that the assessee had actually transacted with the said parties. Thus, in absence of any such material or enquiry done by the Assessing Officer, no addition could be made in the hands of the assessee simply relying upon the uncorroborated AIR Information. Accordingly, addition made by the Assessing Officer is directed to be deleted - Decided in favour of assessee.
Addition on account of disallowance of current year’s loss on account of redemption of preference shares and loss on sale of shares - Held that:- The assessee had entered into these arrangement for specific purpose and in a capacity of shareholder was furthering its own interest by subscribing the shares. It had borrowed money from EXIM and Axis Bank at high interest rate. To reduce the interest burden, the assessee decided to pay these debt by redeeming its preference shares. Subsequently, it subscribed again for fresh preference shares in order to further its participation interest in downstream subsidiaries. This transaction cannot be recharacterized or inferred as a “loan”. The transaction of purchase and redemption cannot be held to be a loan transaction and accordingly such a loss cannot be disallowed which is purely on account of indexation. We thus, direct the Assessing Officer to work out gain/loss after treating it as a transaction of purchase and redemption of shares. - Decided in favour of assessee.
Disallowance of interest expense arising out of lease payment u/s 40(a)(ia) on the ground that TDS u/s 194A has not been deducted - Held that:- In the case of ITO vs M/s Pratibhuti Viniyog Ltd, [2014 (11) TMI 8 - ITAT MUMBAI ] wherein decided the issue in favour of the Department by holding that “provision of section 40(a)(ia) is applicable even on the paid amount”. - Decided against assessee.
Disallowance of interest expense u/s 36(1)(iii) holding that money has been advanced on interest free loans to the sister concern/subsidiaries - Held that:- the advance given to the subsidiary was 1.32 crores as on 01.04.2008 and as on 31.03.2009 it stood at ₹ 6,13,19,000/-. As against that, the assessee had own funds to the tune of ₹ 346.19 crores in the form of share capital and share premium and during the year it has raised shares of 279.93 crores out of which 4.81 crores had been lent to the sister concern. In such a situation, where the assessee has substantial own funds, then presumption is that assessee has given advance to its sister concern from its own funds. Thus, following the ratio laid down by the Hon’ble jurisdictional High Court in the case of Reliance Utilities and Power Ltd (2009 (1) TMI 4 - BOMBAY HIGH COURT ) which have been followed in various other decisions, we hold that no disallowance of interest is called for. - Decided in favour of assessee.
Addition on account of Foreign exchange gain on redemption of preference shares - Held that:- we hold that the approach of the TPO as well as Assessing Officer is not correct. Such a foreign exchange gain, which has been separately accounted in the books, cannot be taxed as business income here in the case of the assessee, because same was on account of shares and therefore, same shall be considered while working out capital gain or loss as per section 48. Thus we hold that the gain arising to the assessee, shall be taxable under the head “capital gains” because the foreign exchange gain has been account of capital asset i.e. on account of shares and any such claim would also be of a capital in nature. The Assessing Officer has erred in law in making the said addition as normal business profits of the assessee. - Decided in favour of assessee.
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2015 (7) TMI 1050
TDS u/s 194J - roaming charges paid by the telecom operators to service providers - Held that:- The issue about levy of TDS U/s 194J on the roaming charges paid by the telecom operators to service providers and applicability of Section 194J has been considered in detail by this very Bench in the case of M/s Bharti Hexacom Limited (2015 (7) TMI 175 - ITAT JAIPUR ) wherein held that there is no human intervention involved in providing these services, therefore, roaming charges paid by the assessee do not amount to fee for technical services U/s 194J of the Act read with Section 91(vii).
Following our own judgment, we are upholding the order of the ld CIT(A) holding that the assessee is not liable for TDS u/s 194J, interest thereon and consequently not being the assessee in default. - Decided in favour of assessee.
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2015 (7) TMI 1049
Transfer pricing adjustment - selection of comparable - Held that:- Bodhtree Ltd., Tata Elxsi Ltd. and Infosys Technologies Ltd. as not comparable with a software development service provider such as the Assessee as dissimilar as compared to software development services provider.
Working capital adjustment - Held that:- On going through the TPO’s order as well as annexure D referred to in the transfer pricing order on working capital adjustment, we find that the TPO has computed it at 5.97% but has not given any basis for restricting the adjustment to 1.71%. In various cases relating to transfer pricing adjustment, this Tribunal has been directing to give working capital adjustment on actual basis and the TPO, having arrived at 5.97%, ought to have adopted the same instead of restricting it to 1.71%. In view of the same, we deem it proper to remand this issue to the file of the AO/TPO for working out the ALP after giving adjustment of working capital as per the calculation of the AO in annexure D annexed to the transfer pricing order.
Income tax of employee - whether treated as business expenditure or personal liability of the employee and is not the liability in the hands of the assessee-company ? - Held that:- Remuneration and the income-tax thereon paid on behalf of the employee therein, is an allowable expenditure u/s 37 of the Act. See Tata Yadogawa Ltd. vs. CIT [2010 (9) TMI 715 - Jharkhand High Court] and ABN Amro Bank vs. JCIT (2005 (6) TMI 218 - ITAT CALCUTTA-E) - Decided against revenue
Disallowance of reimbursement of software expenses - Held that:- Since the issue is covered in favour of the revenue by the decision of the jurisdictional High Court, in the case of Samsung Electronic Co. Ltd. (2011 (10) TMI 195 - KARNATAKA HIGH COURT ) we see no reason to interfere with the order of the CIT(A) in making disallowance. - Decided against revenue
Deduction u/s 10A - Held that:- The direction of the CIT(A) to reduce the expenditure incurred in travel, telecommunication etc., both from export turnover as well as total turnover for the purpose of computation of deduction u/s 10A of the Act as confirmed in the case of CIT vs. Tata Elxsi (2011 (8) TMI 782 - KARNATAKA HIGH COURT ) - Decided against revenue
Rate of depreciation at 60% on circuit test boards - Held that:- The assessee had submitted before CIT (Appeals) that the ‘Circuit Test Boards’ are used as a specialized functional accessory to the ‘computer systems’. The CIT (Appeals) has accepted this contention of the assessee and following the decisions in the case of BSES Rajadhani Powers Ltd.[2010 (8) TMI 58 - DELHI HIGH COURT] held the ‘circuit test boards’ to be accessories and peripherals of computers and further held that the customs duty paid for purchase of such circuit test boards also qualifies for depreciation at the rate of 60%. We find that the CIT(A) has followed the precedents to allow depreciation at the rate of 60% and the learned Departmental Representative has not been able to rebut this finding with any evidence to the contrary. Therefore, we see no reason to interfere with the same.- Decided against revenue
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2015 (7) TMI 1048
Confiscation - Dues - Appeal - Locus standi - Supreme Court ordered that since all the eight respondents have been duly served and Appellant and respondent No.8 have filed the statement of case, therefore, the appeal stands completed and hence Registry to process to list the same before the Hon'ble Court, as per rules.
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2015 (7) TMI 1047
Assessment u/s 153C - whether the Assessing Officer (AO) is required, for the purposes of Section 153- C of the Act, to record satisfaction even when the AO of the person searched and the AO who exercises jurisdiction qua the Assessee is the same? - ITAT held that the AO has not recorded his satisfaction qua the searched person - Held that:- The Revenue has not placed any material to dispute the factual finding of the ITAT that the requirement of the law explained by this Court in Pepsi Foods [2014 (8) TMI 425 - DELHI HIGH COURT ] regarding the recording of satisfaction by the AO even in respect of the searched person was not fulfilled. Consequently, the fact that it was the same AO both for the searched person and the Assessee makes no difference to the consequence of non-compliance with the legal requirement regarding the recording of satisfaction. The Court also agrees with the ITAT that even if the AO were the same, satisfaction would have to be recorded separately qua the searched person and the Assessee. - Decided against revenue
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2015 (7) TMI 1046
Addition on income from other sources - receipt of accommodation entries - Held that:- As found from the record that assessee has neither received any accommodation entry in the form of LTCG nor offered any income under such head. Even in the bank statement the AO did not find any credit entry of ₹ 5,20,215/- to support the contention that assessee was in receipt of cheque of ₹ 5,20,215/- on account of bogus LTCG.
The assessee has also confirmed that she has only one bank account. Merely on the plea that computer of M/s Mahasagar Securities Pvt. Ltd. indicated issue of accommodation entry in the name of assessee, the amount cannot be added in the hands of the assessee unless AO brings on the record cogent evidence to show that amount was actually received by assessee or credited in her bank account. It is also not the case of AO that Bank account of Mahasagar Securities Pvt. Ltd. indicates any issue of cheque in the name of assessee.
Merely entry in computer found at the premises of Mahasagar Securities Pvt. Ltd. could not be made the basis of addition in the hands of assessee unless some corroborative evidence is brought on record by AO to substantiate the stand that assessee was in receipt of such bogus entry. Under these circumstances, in the absence of any evidence on record, we do not find any merit in the action of the AO for adding a sum of ₹ 5,20,215/- as bogus LTCG in the hands of the assessee. - Decided in favour of assessee
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2015 (7) TMI 1045
Revocation of CHA License - Investigation not completed within 9 months - Held that:- Appellant s licence has been suspended since 19/12/2013 and the same continued to remain under suspension by the impugned order dated 13/1/2014. CBLR, 2013 itself has prescribed an over all time limit of 9 months to complete the proceedings against the CHA right from the initiation of the proceedings to its final disposal. None of the time limit has been adhered by custom authority in this case. In these circumstances it will be in the interest of equity and justice to set aside the suspension and allow the appellant to function as a CHA pending completion of inquiry by the custom authority - Decided in favour of Appellant.
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2015 (7) TMI 1044
Denial of refund claim - Unutilized CENVAT Credit - Notification No. 5/2006-CE (NT) dated 14.03.2006 - Held that:- The issue involved has been decided in favour of the appellants in earlier appeals under [2014 (4) TMI 288 - CESTAT AHMEDABAD]. The same was upheld by the Hon'ble Gujarat High Court under order [2015 (2) TMI 477 - GUJARAT HIGH COURT] which is after the date of filing of appeals by the Revenue. Once the issue has been settled by the jurisdictional High Court, the appeals filed by the Revenue do not survive. Accordingly, the appeals filed by the Revenue are rejected with direction that adjudicating authority should quantify refund amount in remand proceedings directed by the first appellate authority. - Decided against Revenue.
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