|
Advanced Search Options
Case Laws
Showing 381 to 400 of 1678 Records
-
2016 (9) TMI 1304
TPA - comparables selection - Held that:- We have perused the above decision of the Hon’ble Bombay High Court in SGS Pvt. Ltd [2015 (11) TMI 1619 - BOMBAY HIGH COURT] reveals that in the said case the comparables considered by the assessee in the TP study were rejected by the TPO and the TPO harped on the Press Note No.9 issued by Ministry of Commerce stating that payment of 1% on domestic sale and 2% on export was permitted for use of trade mark and brand name on foreign collaboration. The Tribunal on consideration of all the facts had concluded that the Royalty @ 3% could not be faulted as it was covered by FIPB instructions. Besides, that the Tribunal has recorded the fact that Transfer Pricing study indentified the uncontrolled transaction of royalty at 10%, whereas the respondent-assessee had made only a payment at 3% to its Associated Enterprises.
It is the Department who took the stand that as per as per clause III of the Press Note No.9 (2000 series) issued by Ministry of Commerce, Government of India the payment of royalty up to 2% for exports and 1% for domestic sales is allowed under automatic route on use of trademarks and brand name of the foreign collaborator without technology transfer and therefore the bench marking of royalty payable by the assessee to its parent company has to be lower than 3% for the purposes of arriving at the ALP. However when it was pointed out that the case of the said assessee was covered under clause IV of the said circular, the counsel for the revenue on instructions of the Department, stated that the assessee was covered by clause IV of the Press Note 9 (2000 series) dated 8 September 2000 vide which royalty Royalty upto 8% is admissible on export sales by wholly owned subsidiaries to its offshore parent companies. The Hon’ble Bombay High Court thus considered the issue and held that the case of the assessee was covered under the Govt. Instructions. Having taken a specific stand before the Hon’ble Bombay High Court relying upon the FIPB circular in the case of another assessee, now the department is estopped from its own act and conduct to agitate in the case of the present assessee that the FIPB circular can not be applied. The Department is supposed to adopt uniform policy in cases of all the assesses in respect of the same issue and can not be allowed to adopt different yardsticks for different assessees on the same issue.
Even, under the circumstances, it cannot be said that the Hon’ble Bombay High Court has not laid down any proportion of law. Decided in favour of the assessee.
Disallowance of employees’ contribution towards provident fund and ESIC - Held that:- The issue is squarely covered by the decision of the Hon’ble Supreme Court in the case of “CIT vs. Alom Extrusions Ltd.” reported in (2009 (11) TMI 27 - SUPREME COURT) wherein held that the amendment to section 43B vide Finance Act, 2003 w.e.f. 01.04.2004, whereby, the second proviso to section 43B has been deleted and further amendment to 1st proviso has been made, whereby, it has been provided that nothing contained in the said section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable for furnishing the return of income, is retrospective in nature and would operate from 01.04.1988. We, therefore, restore this issue to the file of the AO for the limited purpose to verify that if the contributions towards provident fund & ESIC were paid by the assessee on or before due date of filing of return of income and if the above contentions of the assessee are found correct, then to allow the same in the light of the decision of the Hon’ble Supreme Court in the case of “Alom Extrusions Ltd.” (supra).
-
2016 (9) TMI 1303
Division of the appellant’s income included in the assessment - survey under Section 133A - revenue urges that the decision in CIT vs. MAK Data Pvt. Ltd.(2013 (1) TMI 574 - DELHI HIGH COURT) was overlooked - Held that:- During the course of hearing, the revenue had relied on MAK Data vs. CIT(2013 (11) TMI 14 - SUPREME COURT) . In that case the survey was of the assessee’s sister concern. During its course several documents which had been undisclosed by that concern were found and recovered. During the course of assessment proceedings, when the assessee was questioned about those documents it offered to surrender substantial income on the basis of which penalty proceedings were drawn. The entire focus of discussion was on whether the penalty was correctly levied and the court held that it was. We are of the opinion that the rulings of this court relied upon by the tribunal in Ravindra Kumar Jain’s case (2009 (7) TMI 911 - ITAT DELHI) was appropriate. There is nothing to show any material supportive of the statement made in the course of survey proceedings was found or collected.
-
2016 (9) TMI 1302
TPA - determination of the arms length price - Assessing Officer have adopted the CUP method - Held that:- The similarity of products and their quality and terms and conditions such as scope and terms of warrantees provided, volume of sales or purchases, credit terms, etc., level of the market such as wholesale or retail etc., and the Geographic market i.e., the place in which the transaction takes place (like a country), the foreign currency risks, the alternatives realistically available to the buyer and seller and the intangible property attached to the sale etc., are all the factors to be considered while comparing a transaction under the CUP method.
From the chart produced by the assessee referred to in the above paras, it is noticed that the assessee had purchased the GPC from various countries and therefore, the geographical source, influents the quality and composition of the product and proportionately the price also. Therefore, in our opinion, the T.P. analysis made by the TPO needs re-consideration. In view of the same, grounds of appeal No. 2 to 8 are remitted to the file of the Assessing Officer/TPO for fresh analysis in accordance with Rule 10B(1)(a) of the I.T. Rules.
Adoption of corporate guarantee fee at LIBOR + 0.50% accepted
Disallowing the SAP implementation expenses - Held that:- We direct the Assessing Officer to allow the expenditure incurred on implementation of the application software of SAP as revenue expenditure
-
2016 (9) TMI 1301
Deduction u/s 80IC in relation to the profits earned in Haridwar Unit - Held that:- AO and the DRP have merely noted the difference in the figures without appreciating reconciliation and the unit-wise computation of net income made by the assessee, which is in conformity with the methodology accepted in the past in the income-tax returns filed by the assessee.
On this aspect, in our view, there is an apparent mistake made by the Assessing Officer in computing the amount of deduction allowable to the assessee under section 80IC of the Act. Pertinently, the basis of allocation of administrative, sales and interest expenses, etc. adopted by the assessee to arrive at the eligible deduction under section 80IC is similar to that adopted for computing the deduction under section 80IB of the Act. Whereas, the Assessing Officer accepts the working of deduction under section 80IB of the Act as determined by the assessee, while on the other hand, determination of deduction under section 80IC of the Act has been tinkered with. This reflects inherent inconsistency on the part of the Assessing Officer on the issue of allocation of transactions of Head office and on account of administrative, sales and interest expenditure, etc. to the other manufacturing units, including those eligible for deduction under section 80 IB and 80 IC of the Act. For the said reasons, we deem it fit and proper to set-aside the matter back to the file of Assessing Officer, who shall revisit the computation of deduction allowable to the assessee under section 80IC of the Act afresh.
-
2016 (9) TMI 1300
CENVAT credit - the appellant have availed double credit in respect of some invoices and simultaneously they have paid entire amount alongiwth interest - assessee claims it to be bonafide mistake - Held that: - wrong availment of credit of 5 invoices are due to reason that some invoices were entered twice in the Cenvat account maintained on computer system - Moreover when the mistake was pointed out by the audit party, appellant have promptly paid the entire service tax with interest. In a case where service tax alongwith interest is paid voluntarily without any contest, immunity is available u/s 73(3) - the appellant has made out fit case for waiver of penalty u/s 73(3) of FA, 1994 - appeal allowed - decided in favor of appellant.
-
2016 (9) TMI 1299
CENVAT credit - service tax paid on outward transportation of goods - Held that: - issue stands covered by the decision passed in the appellants own case for the subsequent period M/s Ultratech Cement Ltd. Versus CC, CE & ST, Hyderabad [2016 (7) TMI 594 - CESTAT HYDERABAD], where it was held that outward transportation is an input service and is eligible for credit - appeal allowed - decided in favor of appellant.
-
2016 (9) TMI 1298
TPA - MAM - ALP determination - Held that:- So far as determination of arm’s length pricing is concerned, all that is to be examined is as to what is the arm’s length price of the transaction in question, irrespective of the fact as to whether or not the person entering into transaction is in a high tax jurisdiction or low tax jurisdiction. If a person is a in a low tax jurisdiction but the arm’s length price of the transaction is the same at which the transaction is entered into, the transaction value cannot be tinkered with. In any event, the base erosion, which is sought to be checked by the transfer pricing provisions in India, is the tax base in India, but then irrespective of whether the recipient is in UAE (Sharjah) or Germany, the tax withholding rate from fees for technical services is the same i.e. @10%. Obviously, Indian transfer pricing cannot be, and is not, concerned with whether the Woco Group, as a whole, has been able to reduce their tax burden by locating their units rendering technical services outside Germany. The authorities below were thus clearly swayed by the considerations which were not at all germane to the context.
As long as the technical services are received by the assessee, the payment for these services cannot be declined on the ground that ideally this payment should have been made to the German entity. As for the contention that all these services, for which Woco Sharjah is paid, are already covered by the agreement with Woco Germany, this is factually incorrect. Clearly, therefore, services are rendered, Woco Sharjah is paid for the same, and at best, the contention of the revenue is that these services are de facto rendered by Woco Germany as even the personnel of Woco Sharjah who have rendered the services are primarily Woco Germany employees on secondment to Woco Sharjah. Nothing on turns on this argument either because as long as services are rendered under the arrangement with Woco Sharjah- as is our categorical finding, and irrespective of who renders these services, no arm’s length price adjustment can be made to the consideration paid for these services unless it is established that the arm’s length price for the services received is less than the transaction value. That’s not the case here. It is also contended by the learned DR to the effect that visit of Woco personnel will be in the nature of ‘shareholder services’ rather than ‘technical services’, but then the technical services, by no stretch of logic or by any convention, are treated as ‘shareholder services’.
The assessee has given a CUP analysis, on the basis of per mandays of technical services, which shows that in an uncontrolled situation, the technical service fees, including travel costs, would have been Euros 2,84,115 as against Euros 2,50,000 paid by the assessee. No specific infirmities are pointed out in this CUP analysis, save and except for the observation that the nature of services is substantially different. It has been contended by the learned DR that only the visits of Lutz Becker, Chief Technical Officer of Woco Group- who is based in Sharjah, should be taken into account as he alone was in a position to render any useful services to Woco India, but then the ascertainment of ALP is not for the consideration paid for visits of this official, as it is not a separate transaction, and as long as the persons have attended to the technical services in question, the CUP analysis for the fees for technical services has to essentially take into account the visits of all these persons since the consideration, for CUP analysis, is based on mandays of persons attending to the technical services. This plea is also devoid of legally sustainable merits. As noted earlier, no other comparables are brought on record by the TPO are either. This is wholly unworkable. Even if CUP is sought to be applied, as canvassed by the learned DR, appropriate comparables are to be brought on record, in case the comparables adopted by the assessee are to be rejected. One cannot proceed on the basis that under CUP method these services are worthless and, therefore, NIL value should be adopted. For the detailed reasons set out above, such an approach is unsustainable in law. The assessee has adopted TNMM, as the transactions of manufacturing and fees for technical services are interlinked, and the authorities below have not taken any specific objection to the same. This the impugned ALP adjustment of ₹ 1,34,85,624 is indeed devoid of any legally sustainable merits and it must stand deleted. Appeal for the assessment year 2006-07 is allowed.
Disallowance under section 10AA - non-compliance with the scheme of Section 144C - Held that:- Any non-compliance with the scheme of Section 144C is fatal to the assessment itself. As a corollary thereto, when an issue is not raised in the draft assessment order, it cannot be raised in the final assessment order either. As learned counsel rightly points out, once a draft assessment order is passed by the AO and the matter is even carried before the DRP by the assessee, all that the Assessing Officer can do, while framing the final assessment order, is to frame the final assessment order in the light of the draft assessment order and the directions of the DRP. We are in considered agreement with the learned counsel’s contention that no other issue, other than the issues taken up in the draft assessment order and the directions of the DRP, can be taken up by the Assessing Officer at the stage of passing final assessment order. Any other view of the matter will be contrary to the scheme of Section 144C. In this view of the matter, and without dealing with other contentions which are academic at this stage, we hold that the impugned disallowance of ₹ 7,64,15,421, in respect of claim under section 10AA, is wholly unsustainable in law. We, accordingly, delete the same as well.
The assessee has also raised some other legal issues including core legal issues on merits of admissibility of deduction under section 10AA and on impermissibility of reference to the TPO- without affording the assessee an opportunity of hearing before doing so, but, having decided the matter on merits, we see no need to deal with these issues. All those issues and the related grounds of appeal have, in the light of the assessee having succeeded on merits as above, been rendered academic and infructuous.
-
2016 (9) TMI 1297
Valuation - includibility - handling charges - postage - penalty - Held that: - There is no evidence to support the contention of the appellant today to prove that it was supplementary and optional for the appellant to meet the obligation of the buyer. In absence of such evidence, the duty liability stands sustained - considering the legal interpretation involved, the penalties imposed are waived - appeal allowed - decided in favor of assessee.
-
2016 (9) TMI 1296
Addition u/s 40A - Held that:- Nowhere the AO doubted genuineness of the expenditure and insufficiency of the details. Only reason given by AO was that payment was excessive or unreasonable. As per our considered view whenever provisions of Section 40A(2) is invoked, burden is on the revenue to show that payment made to sister concern is more than the fair market value for which similar service are available. However, there is no such finding by the AO to allege that payment so made was not reasonable or similar service were available to assessee at lower price than what was paid to the sister concern for getting the work done. After discussing the facts in detail, the CIT(A) has also applied the decision in the case of Batliwala & Karani Vs. ACIT (2004 (12) TMI 626 - ITAT MUMBAI ) wherein it has been held that unless there is a clear finding that market value of services taken from sister concern is less than the price at which services are obtained, there cannot be an occasion to apply disabling provisions of Section 40A(2). We do not require any interference on our part for deleting the addition made u/s.40A(2). - Decided in favour of assessee
Disallowance of claim of deduction u/s.80IA(4) - absence of the operation and maintenance - Held that:- The appellant carried out the entire development of its own by giving specifications and necessary Designs/plans as per the location of the site, which was done by the technical experts employed by the assessee. Thus, the assessee did the entire development of the infrastructure facility. We also found that the cost of development of the infrastructure facility was paid to the assessee and the same was received by the assessee as per the bills raised. The MCGM while making the payments, deducted tax at source under the provisions of section 194-C of the Act as the development of infrastructure facility was as per the agreement entered into which was contract between the Government Authority and the assessee and the provisions of Section 194-C of the Act were applicable. However, merely because the tax was deducted in terms of provisions of section 194-C of the Act, It did not make the assessee a mere contractor executing the works contract. In the development of the project it was the technical personnel of the assessee that made the proper specifications etc. from time to time as per the location of the site and as the project progressed. Developer does not mean merely a person who was conceiving the idea. Any enterprise developing infrastructural facilities is a developer of such facility since all the responsibility of the project was that of the enterprise from the start of the project till Its completion, Therefore, It would not be said that merely because the idea was conceived by the government and more Importantly on the land, etc. which was in domain of the government, that the government was the developer.
The fact that the TDS was deducted did not in any way bar the appellant from claiming the benefit of deduction u/s.80-IA, as the fact remained that the appellant was a developer of Infrastructural facilities.
With regard to the AO’s objection that assessee is neither BOT nor BOOT, we found that the wordings of the section prior to the amendment made w.e.f. 01.04.2000 did not have any alternative by usage of the word 'OR' in sub-section (4) of section 80lA of the Act and hence, the provision of section 80lA of the Act was available only to an assessee who not only developed but after developing also operated and maintained the Infrastructure facility. Thus, while introducing the provisions of section 80lA of the Act, the concept of BOT /BOOT prevailed and it was in this context that the Department issued circular nO.717 dated 14/8/1995, which clearly explained the new provisions of section 80-lA of the Act in terms of Infrastructural development.
Thus, the concept of BOT IBOOT underwent changes in the year 2000. If the Intention was only to give benefit to enterprises on the income earned from operating and maintaining the Infrastructure facility, In that case, the provision would not have been amended in such a manner so as to also allow benefit to the enterprise which was merely developing the facility.
Further, there would have been no necessity to make the amendment if the enterprise was to be allowed in respect of Income earned from operating and maintaining the facility. When the provision of section 80lA of the Act had been substantially amended and where the enterprise was only a developer of the Infrastructure facility, deduction could not be denied under section 80-lA of the Act on the ground that the concept of BOT/BOOT was the main requirement for getting benefit of deduction under section 80-lA of the Act.
Thus as keeping in view that assessee in earlier years have already been allowed deduction 80IA(1) by the AO, we do not find any infirmity in the order of CIT(A) for allowing assessee’s claim for deduction u/s.80IA - Decided in favour of assessee
-
2016 (9) TMI 1295
Disallowance of gift, boni & chandla expenses - Held that:- The Revenue fails to place on record any material before us rebutting CIT(A)’s findings as above that the assessee has already filed all necessary details and evidences along with proof of payment. There can hardly be any doubt that this assessee is carrying out his multiple construction projects wherein such expenses are undertaken on auspicious occasion of commencement of construction activity etc. We find no reason to interfere with CIT(A)’s finding under challenge. This first substantive ground is declined against revenue.
Disallowance of defect liability provision - Held that:- It is very much admitted that the assessee company has to keep a portion of its contractual money with its clients for sufficiently long period ranging between 12 to 18 months in the form of cash retention or bank guarantee. The same is released only after this defect clause period is over without involving any corresponding repair work. We notice that even the Assessing Officer is fair enough in not disputing this factual position. He rejects assessee’s claim on two counts. The first one is that the assessee has not made provision for any ascertained liability. We find from page nos.35 to 37 of the paper book along with the corresponding agreement that the assessee’s computation of provision of defect liability is computed as per the specific logic therein. Cash retention by its clients is between 5 to 10%. The assessee has made the impugned provision @ 1% by following the above stated computation. Learned departmental representative fails to dispute correctness thereof in the course of hearing. We are of the opinion in these facts and circumstances that the assessee has satisfied both the Assessing Officer’s objections so as to support the lower appellate findings under challenge. The CIT(A) has already set out the corresponding figure forming the basis of estimation. The Revenue’s last argument that preceding assessment years involved different liabilities is also devoid of merits since it is only a difference of nomenclature vis-a-vis the naming of the liability head in the impugned assessment year. - Decided against revenue
-
2016 (9) TMI 1294
Amount received on maturity of “Keyman Insurance Policy” - non taxability and is exempt under Section 1O(10D) - reference to the Circular No.762 dated 18/02/1998 issued by CBDT wherein it was clarified that such amount is taxable in “the hands of recipient - Held that:- The issue arising stands concluded against the Revenue for the reasons mentioned by the Delhi High Court in Rajan Nanda (2011 (12) TMI 392 - DELHI HIGH COURT). It is also accepted by the Revenue that the amendment in Explanation I to Section 10(10D) of the Act has specifically come into force only from 1st April, 2014 and it would not govern / apply to amounts received under the assigned Keyman Insurance Policy prior to Assessment Year 2014-15.
No substantial question of law. Tribunal is justified in holding that amount received by the assessee on maturity of “Keyman Insurance Policy” is not taxable and is exempt under Section 1O(10D) - Decided in favour of assessee
-
2016 (9) TMI 1293
Transfer pricing adjustment in the light of the then prevailing ruling in L.G. Electronics India Pvt. Ltd. v. ACIT, (2013 (6) TMI 217 - ITAT DELHI) - AMP expenses - ssessee urges that the ruling in L.G. Electronics (supra) has been preceded by the Sony Ericsson Mobile Communications India Pvt. Ltd. v. CIT (2015 (3) TMI 580 - DELHI HIGH COURT) - Held that:- Having regard to the facts of the case - as discernable from the ITAT‟s order specially paragraph 3 & 4, we are of the opinion that the matter should be remitted for proper investigation in the first instance to the ITAT. It is so directed.
-
2016 (9) TMI 1292
Eligibility of BID - Held that:- The owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given.
In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court.
Under the circumstances, we find merit in the appeals filed by the appellants and set aside the judgment and orders passed by the High Court and restore the decision of NMRCL to the effect that GYT-TPL JV was not eligible to bid for the contract under consideration.
-
2016 (9) TMI 1291
Addition on unexplained investment in excess stock - Held that:- In terms of ld AR’s contention that there was no retraction but reconciliation of facts and figures as compared to what has been stated and documented at the time of survey, it is noted that though the ld CIT(A) has initially made an observation that there was no immediate retraction and it is a case of delayed retraction and not reliable. At the same time, he has gone through the assessee’s letter dated 30.03.2011 relating to unrecorded purchase bills at the time of survey and expenses in the books of accounts, excess valuation of the stock etc., compared it with the position in the return of income, taken into consideration the remand report of the AO and gone through each of the contentions raised by the ld AR along with the rejoinder to the remand report in terms of unrecorded purchases, valuation, set off etc and has come to a well-reasoned decision. We see no reason to interfere with the order of ld CIT(A) and the same is hereby confirmed. - Decided against assessee
-
2016 (9) TMI 1290
Assessment made u/s 153A/153C - Disallowing the interest paid and business expenses against interest income received from partnership firm - Held that:- No addition in the income can be made in any assessment u/s 153A/153C of the Act without any incrementing material found during the course of search
As could be seen AO has duly examined the claim of the assessee with respect to the deduction of interest expenses on loan borrowed from the interest income earned from the loans advanced and has disallowed ₹ 38,19,800/- and ₹ 90,000 out of the interest expenditure claim of ₹ 96,24,943/-. Apart from the above, the assessee has also voluntarily offered disallowance of interest of ₹ 9,92,861/- u/s 14A of the Act. Thus, the assessee claimed deduction of balance amount of interest expenditure of ₹ 47,22,282/- towards loan borrowed against interest income of ₹ 99, 01,472/- from loan advances, which claim was duly examined and allowed by the AO while framing the assessment orders dated 31.12.2009 u/s 153A read with Section 143(3) of the Act pursuant to first search on 19.07.2007 and no new incriminating material was found or unearthed during search u/s 132(1) of the Act, having being brought on record before the Tribunal and the assessment framed vide orders dated 31.12.2009 being concluded assessment as framed prior to date of second search on 29/03/2011, we are of considered view that the concluded assessments in the instant appeal cannot be disturbed on the same set of material facts as prevailing when the assessment was framed u/s 153A read with Section 143(3) of the Act on 31.12.2009 in pursuant to first search on 19.07.2007 and hence, we dismiss the appeal filed by the Revenue - Decided in favour of assessee
-
2016 (9) TMI 1289
Computation of capital gain - fair market value taken as on 01.04.1981 - AO disallowed the claim of the assessee on the basis of guideline value of Sub-Registrar - Held that:- Assessing Officer was expected to determine the fair market value as on 01.04.1981. Fair market value is nothing but a price that may be agreed between the willing purchaser and willing seller. Guideline value will not always reflect the market value. The guideline value is only to guide the Sub-Registrar to determine the market value for the purpose of collecting stamp duty. Therefore, this Tribunal is of the considered opinion that the guideline value of Sub-Registrar is one of the factors to be taken into consideration for the purpose of determining the fair market value as on 01.04.1981. Moreover, the location of the property, infrastructure facilities available around the property, public access to the property, distance between the bus stand, railway station, airport from the property, potential for future development, proximity to the schools, colleges and other public institutions, etc. are needed to be taken into consideration for the purpose of determining the fair market value.
In the case before us, the property is admittedly located at Sarangapani Street, T. Nagar, which is one of the prime areas in the city of Chennai and there are several infrastructure facilities such as railway station, bus stand, market around the locality. There are schools, institutions and business establishments are available around the locality. While taking into consideration all the facilities available in the locality, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the fair market value estimated by the assessee as on 01.04.1981 is reasonable and acceptable one.
Coming to the value of the building, if the property was demolished as on 01.04.1981, it would have fetched ₹ 15 lakhs in respect of debris and other material used in construction. The assessee has claimed only 46% of ₹ 15 lakhs estimated. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the claim of the assessee is reasonable. - Appeal of assessee allowed.
-
2016 (9) TMI 1288
TPA - non consideration of additional evidences - Held that:- Keeping in view the fact that additional evidences brought on record by the assessee before the ld. TPO/ld. DRP have not been considered and the fact that identical issue in assessee’s own case has already been restored back for fresh adjudication by the AO qua AY 2007-08 and AY 2008-09, we deem it expedient to restore this issue as to the manufacturing segment to the file of AO who shall adjudicate after providing an opportunity of being heard to the assessee.
International transaction relating to contract and R&D and made a suo motu adjustment - Held that:- TPO has examined separate segmental account in respect of transaction by transaction segment. However, by following the rule of consistency, the TPO is required to decide the issue de novo after providing an opportunity of being heard to the assessee. So, ground no.5 is determined in favour of the assessee and the matter is restored to the TPO.
Foreign currency fluctuation needs to be taken into account for TP adjustment both for comparable companies as well as tested party. So, this ground is also required to be restored to the TPO to make fresh adjustment regarding distribution segment by taking into account foreign currency fluctuation duly demonstrated by the assessee in view of the observations made herein before.
Disallowance of 3/4th of the advertisement and sales promotion expenses and 4/5th of the recruitment expenditure - Held that:- Undisputedly, identical issue was dealt with by the coordinate Bench in assessee’s own case qua AY 2002-03 and AY 2003-04, orders of which are available at pages 64 to 81 of the paper book. Disallowance on account of advertisement and sales promotion expenses to the tune of ₹ 6,32,85,750/- and recruitment expenditure to the tune of ₹ 1,12,88,617/- made by the AO and confirmed by ld. DRP are allowable on the ground that these expenditure have not resulted into acquisition of any asset by the assessee company nor any enduring additions have been accrued to the assessee. So, by following the order passed by the coordinate Bench in assessee’s own case qua AY 2002-03 and AY 2003-04, grounds no.7 & 8 are determined in favour of the assessee as AO/DRP have erred in disallowing 3/4th of the advertisement and sales promotion expenses amounting to ₹ 6,32,85,750/- and 4/5th of the expenditure of the recruitment expenditure to the tune of ₹ 1,12,88,617/-. However, AO to verify the exact period of contract to compute the expenses incurred by the assessee and disallow the expenses if the same are found to be not attributable to the year under assessment.
Disallowance of 3/4th of the licences - Held that:- Keeping in view the settled principle and the facts and circumstances of the case, expenditure incurred by the assessee on licences and permits being necessary to run the business without which assessee’s unit would have stopped, which are revenue in nature and cannot be deferred to another 5 years. Even otherwise, licence fee for one year has been claimed by the assessee in the year under assessment itself.
Eligible for exemption u/s 10A - Held that:- The ratio of the judgment in case of TEI Technologies (P.) Ltd. (2012 (9) TMI 47 - DELHI HIGH COURT ) is that implication of exemption provisions contained u/s 10A is that the particular income which is exempt from tax does not enter in the field of taxation and is not subject to any computation. So, the business loss of non-eligible units could not be set off against profits of the undertaking eligible for exemption u/s 10A as section 10A unit is not taxable at all. However, section 10A deduction will not affect for TP adjustment nor this profit is to be deducted. So, in these circumstances ground are required fresh consideration by the AO who shall verify the correctness of the claim of the assessee regarding expenses and deduction u/s 10A of the Act
-
2016 (9) TMI 1287
Validity of reopening of assessment - Held that:- There is no nexus between the prima facie inference arrived in the reasons recorded and information; the information was restricted to cash deposits in bank account but there was no material much less tangible, credible, cogent and relevant material to form a reason to believe that cash deposits represented income of the assessee; that even the communication dated 24.1.2012 could not be made a basis to assume jurisdiction in view of the fact that such an enquiry letter is an illegal enquiry letter and thus cannot be relied upon; that the proceedings initiated are based on surmises, conjectures and suspicion and therefore, the same are without jurisdiction; that the reasons recorded are highly vague, far-fetched and cannot by any stretch of imagination lead to conclusion of escapement of income and there are merely presumption in nature; that it is a case of mechanical action on the part of the AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such deposits represented income. - Decided in favour of assessee.
-
2016 (9) TMI 1286
Non-deduction of tax at source on interest paid to NBFCs - amount already paid during the year or amount shown as payable as on 31st March of every year - Held that:- In the case of Girdhari Lal Bargoti (2015 (11) TMI 746 - ITAT JAIPUR), it has been held that considering the issue of amount already paid during the year or amount shown as payable as on 31st March of every year, dealing with the provisions of Section 40(a)(ia) of the Act, different courts have taken mutually divergent views and as such, there is a diversion of legal opinion, which is both in favour of the assessee and in favour of the department. In such a situation, the Jaipur Tribunal has followed the Hon'ble Supreme Court decision in the case of Vegetable Products Limited (1973 (1) TMI 1 - SUPREME Court) to decide the matter in favour of the assessee. Here, it is seen that clearly, the decision in the case of Vector Shipping (2013 (7) TMI 622 - ALLAHABAD HIGH COURT) is in favour of the assessee, whereas the decisions the case of CIT Vs. Crescent Export Syndicate [2013 (5) TMI 510 - CALCUTTA HIGH COURT], CIT Vs. Sikandar Khan N. Tunvar [2013 (5) TMI 457 - GUJARAT HIGH COURT] and PMS Diesels Vs CIT (2015 (5) TMI 617 - PUNJAB & HARYANA HIGH COURT) are in favour of the department. Therefore, evidently, there is a cleavage of judicial opinion on the issue. In such a situation, the mandate of the law, as per decision of the Hon'ble Supreme Court in the case of Vegetable Products Ltd. (supra) is to follow the view in favour of the assessee. That being so, by respectfully following the decision of the Coordinate Bench of Jaipur ITAT in the case of Girdhari Lal Bargoti (supra), the issue is decided in favour of the assessee.
-
2016 (9) TMI 1285
Validity of reopening of assessment - unexplained deposits - Held that:- In this case, two separate reasons have been recorded for reopening. This itself shows non-application of mind. Thus, have to necessarily conclude that the reasons were recorded without application of mind. Therefore, on this ground itself, the reopening of assessment has to be held bad in law by following the judgements of the jurisdictional High Court in the case Signature Hotels Pvt. Ltd. vs. ITO (2011 (7) TMI 361 - Delhi High Court ) wherein it was held that notice issued based on a report from Investigation Wing is invalid where the AO does not examine the evidence.
The order of the Delhi Bench of the Tribunal in the case Bir Bahadur Singh Sijwali vs. ITO (2015 (2) TMI 60 - ITAT DELHI) refer to the proposition that mere deposit in bank cannot lead to the conclusion, or even inference, that income has escaped assessment. - Decided in favour of assessee.
............
|
9911796707
