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Showing 401 to 420 of 2184 Records
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2018 (5) TMI 1786
Disallowance u/s 14-A - AO had proceeded to calculate the disallowance based upon the investments made by the assessee - Held that:- CIT(A) and the Income Tax Appellate Tribunal (ITAT) allowed the assessee’s appeals by following the ruling in ‘Cheminvest Limited vs. Commissioner of Income Tax-VI’, (2015 (9) TMI 238 - DELHI HIGH COURT) the Court had then held that in the absence of any exempt income disallowance was impermissible. For the relevant Assessment Year (2013-14), concernedly, the assessee did not report any exempt income. Consequently, no substantial question of law arises; the appeal is therefore dismissed along with the pending application.
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2018 (5) TMI 1785
MAT - Manner of computation of brought forward loss or unabsorbed depreciation, whichever is less to be deducted while computing books profit - Accounting treatment of MAT credit entitlement - Held that:- In principle we hold that the assessee is eligible for claiming MAT credit entitlement as reversal for Income Tax provisions. At the time of assessment proceedings the Assessing Officer has failed to examine as to whether MAT credit entitlement claimed by the assessee is on account of prepayment of tax. This fact requires verification. Accordingly, we direct the Assessing Officer to verify the same and decide the issue accordingly.
Comparable selection - Held that:- Companies functionally different from that of assessee as engaged in software development business need to be deselected from final list.
Addition is to be made by applying net profit rate the same should be applied to be expenditure incurred by the assessee for providing services to its AEs only - Held that:- In the case of Commissioner of Income Tax Vs. Thyssen Krupp Industries India (P.) Ltd. [2015 (12) TMI 1076 - BOMBAY HIGH COURT] affirming the view of Tribunal on this issue held that the adjustment which is mandated in terms of Chapter X is only in respect of international transaction and not transactions entered into by assessee with independent unrelated third parties. The adjustment in respect of international transactions should be restricted to international transactions and not to the transactions entered into with independent parties. AR has pointed that the CIT(Appeals) has accepted this proposition in assessment years 2002-03 and 2003-04 and the Department did not file any appeal against the order of Commissioner of Income Tax (Appeals) on this issue. This fact has not been rebutted by the DR. Thus, in view of the fact that this issue has been settled by the Jurisdictional High Court we find merit in the ground raised by the assessee.
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2018 (5) TMI 1784
TPA - transfer pricing adjustment on account of management fees and communication cost - Held that:- We find that in assessment year 2008-09 similar ground relating to payments for meeting expenditure, travel cost, stock cost, etc. were disallowed by the TPO. Tribunal in appeal filed by assessee [2017 (4) TMI 866 - ITAT PUNE] remitted the issue back to the file of Assessing Officer/TPO to decide the issue afresh. One of the contentions of the assessee is that these costs have been recovered as arrangement for remuneration is cost plus mark-up. TPO as well as DRP has failed to take note of this fact. Thus, this issue needs revisit to the file of TPO/Assessing Officer for reconsideration. TPO/Assessing Officer shall grant reasonable opportunity of hearing to the assessee before deciding this issue afresh, in accordance with law.
Comparable selection - functinal similarity - rejection of Goldstone Technologies Limited being a loss making entity - Held that:- It is a well settled proposition that only persistent loss making companies have to be excluded from the list of comparables. Nowhere it has been urged by the Revenue that the aforesaid company is functionally dissimilar or does not qualify the filters adopted by the TPO for selection of the comparables. We further observe that Goldstone Technologies Limited was selected as one of the comparables by the assessee in immediately preceding assessment years i.e. assessment year 2008-09. TPO has not raised any objection to the inclusion of such company in the assessment year 2008-09. Thus, in view of the facts discussed above, we are of considered view that the Goldstone Technologies Limited deserves to be included in the list of comparables.
Companies functinlly dissimilar with that of assessee need to be deselected from final list.
Errors in computation of working capital adjustment in relation to international transactions - Held that:- The assessee has purportedly filed application u/s. 154 for rectification of the mistake in computation of working capital adjustment. The Assessing Officer is directed to expeditiously dispose of the application of the assessee filed u/s. 154 of the Act.
We direct the Assessing Officer to grant risk adjustment to the assessee to iron out difference on this account with the comparables.
Re-computation of voluntary transfer pricing adjustment in respect of sales support services - Held that:- We find that the DRP is silent on the objections raised by the assessee qua provision of sales support services. Therefore, we deem it appropriate to remit this issue back to the file of DRP for deciding the objections raised by the assessee in respect of sales support services.
Charging of interest u/s. 234A for late furnishing of return of income - Held that:- As the assessee has pointed that the last date for filing return of income was extended to 31-10-2009 and the assessee filed return of income on 30-10-2009. Thus, there was no delay in filing of return of income. This fact requires verification. Accordingly, we remit this issue back to the file of Assessing Officer for ascertaining the last date for filing return of income. If the assessee has filed return of income within the extended period, the interest u/s. 234A is not to be charged.
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2018 (5) TMI 1783
CENVAT Credit - input services - Rent-a-cab Service - Tour & Travels Service - Staff Transportation Services - Held that:- The issue of eligibility of Cenvat credit of service tax paid on the aforesaid services, namely, Rent-a-cab Service and Tour & Travels Services are covered by the judgements Maruti Suzuki India Ltd’s case [2016 (11) TMI 237 - PUNJAB AND HARYANA HIGH COURT], C.J. Gelatine Products Ltd’s case [2011 (9) TMI 748 - CESTAT, NEW DELHI] and Essar Oil Ltd’s case [2015 (12) TMI 1062 - GUJARAT HIGH COURT] - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (5) TMI 1782
Exemption under section 10BA to a trading and export firm which was not involved in manufacturing or production of eligible artistic articles - Held that:- The issue involved in this case is squarely covered by the decision of this Court in the case of “Ranjana Johari Vs. Assistant Commissioner of Income Tax, Circle-6, Jaipur” [2015 (10) TMI 2557 - ITAT JAIPUR] as held as per sub-section (6) of section 10BA, the sub-section (8) and sub-section (1) of section 80IA also applicable in relation to the undertaking referred to in this section as they apply for the purpose of undertaking referred to in section 80IA. Section 10BA was inserted by the Finance Act, 2003 with effect from 1.4.2004 whereas section 80IA was inserted by the Finance Act, 1999 with effect from 1.4.2000. Originally section 80IA was inserted by the Finance Act, 1991 with effect from 1.4.1991. The languages of both the sections are same but the effective dates are different. Therefore, findings of Hon’ble Supreme Court in the case of Liberty India [2009 (8) TMI 63 - SUPREME COURT]squarely are applicable in case of deduction claimed by the assessee under section 10BA and credited duty draw back and DEPB in the Profit & Loss Account, but is not derived income from undertaking. Therefore, we reverse the order of ld. CIT (A) to that extent.
Entire sale proceeds not to be treated as profits but only difference between sale value and face value of credit – DEPB credit chargeable as income under section 28(iiib) in year in which applied for against exports. Further, profit on transfer of credit chargeable under section 28(iiid) in year in which transferred.
In view of above, the matter is hereby remitted to the Assessing Officer and it will open for both the parties to raise their contentions before the Assessing Officer.
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2018 (5) TMI 1781
Pre-deposit - in the regular appeal filed against the order of penalty, the petitioner has already paid 12.5% of the penalty - Held that:- The writ petition is disposed of directing the petitioner to pay another sum equivalent to 12.5% of the penalty demanded within a period of four (4) weeks from today. If such deposit is made, the recovery of the balance of penalty shall stand stayed until disposal of the main appeal arising out of penalty and arising out of assessment.
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2018 (5) TMI 1780
Clandestine removal - respondents had surrendered an unaccounted income of ₹ 150 lakhs to Income Tax authorities on 04/09/2008 - Demand of Central Excise Duty - Held that:- Admittedly, Central Excise duty is payable of the goods manufactured by the assessee, but in this case revenue has not come up with any evidence that respondent has manufactured and clandestinely cleared the goods - no duty is payable by the respondents - appeal dismissed - decided against Revenue.
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2018 (5) TMI 1779
Set of losses - Held that:- Principal income of the respondent assessee is from speculation business and, as such, certain losses could not be set off otherwise than against gains from the same business. It was found, as a matter of fact, that more than 50 per cent of the business of the assessee was not on account of speculation. No legal issue arises in such circumstances.
Expenditure incurred on account of income which is exempted from tax is not eligible for deduction. Again, on the factual basis, the Appellate Tribunal found that the expenditure claimed as a deduction was not for the purpose of any income which was exempted from tax.
Share application money - AO found that several of the applicants for issuance of further shares in the assessee shared the same 12, Waterloo Street address as the assessee and that one individual had accepted notices under Section 133(6) of the Act, though different rubber stamps were used along with the signature. The Tribunal was satisfied that the identities of the applicants for shares in the assessee had been established. No legal question arises as a result of such finding. No question of law.
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2018 (5) TMI 1778
Estimation of profit as a percentage of turnover should be 3% or 5% - Held that:- As the decision in the case of Shri Late Mushkam, Adilabad [2017 (4) TMI 1401 - ITAT HYDERABAD], and in the case of Shri Badri Srinivas and others Vs. ITO [2018 (2) TMI 1775 - ITAT HYDERABAD] which is the latest order’s on this issue, prefer to follow the same and direct the A.O to estimate the income of the assessee @ 3% of cost of sales of stock for the impugned assessment year.
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2018 (5) TMI 1777
Corporate Insolvency Resolution Process - Held that:- We are inclined to issue directions to have a reconsideration of modified offer, if any, submitted by the Resolution Applicant in the application. At this juncture Counsel appearing for the H-1 applicant strongly objected issuing such a directions to the RP. According to him such a direction, if issued, it would prejudice to the H-1 Resolution Applicant and that the entire process is to be disrupted.
The above objection seems to have no legal force at all because RP not at all concluded the Corporate Insolvency Resolution Process (CIRP) and the COC did not finalised, which is the best resolution plan to be taken into consideration for its approval. Only ranking of Resolution Applicant based on the highest offer and other requirement to be meted out as per the information memorandum is finalised. So in the interest of all stake holders and in order to arriving for maximisation of value of assets of the corporate debtor allowing the H-2 Resolution Applicant to modify its offer and give an opportunity in participating in the bidding process to be finalised by the COC is just and proper in the nature of this case. In the said circumstances it appears to us that directions to the Resolution Professional is to be issued in order to avoid further interruption in the CIRP.
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2018 (5) TMI 1776
Determination of arm’s length price by the TPO/AO in relation to the ‘software development services’ segment - Comparable selection - Held that:- As per the assessee it had entered into agreements with Zafin BVI for the provision of software development services and has rendered software development services to its AE and it is remunerated for the services provided by it on the cost-plus basis thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Companies which are having huge turnover cannot be compared with the assessee IT(company which is having only 26.46 crores so as to determine the ALP of the international transactions with its AEs. Hence, in our opinion, it is appropriate to exclude the above three companies as comparables from the list of comparables to determine the ALP of the international transactions with its AEs. Accordingly, this ground of appeal of the assessee is allowed.
Working capital adjustment - TPO reduced the average margin of the comparables by 2.34% by allowing Working Capital Adjustment - Held that:- We are inclined to direct the Assessing Officer to consider the working capital adjustment as computed by him while determining the ALP of international transactions of the assessee with its AEs. Hence, this ground of appeal taken by the assessee is partly allowed.
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2018 (5) TMI 1775
TDS u/s 194C - non-deduction of tax at source from the payment of printing charges by assessee trust - Held that:- Assessee in the present case is an association of paediatric doctors with the principal object of general public advancement. During the year under consideration, it had published journal from the funds received from sponsorship fees and the journals so published were issued to the members free of cost.
As rightly contended on behalf of the assessee before the CIT(A) as well as before the Tribunal, the activity of publication of journal having been financed from the sponsorship fees and the said journals having been issued to the members free of cost, the same cannot be treated as in the nature trade, commerce or business as envisaged in the proviso to section 2(15) and the income of the assessee from the said activity cannot be treated as its business income. Therefore, find merit in the contention of assessee that the A.O. was not justified in reclassifying the income of the assessee from the activity of publication of journals as business income and in making a disallowance u/s 40(a)(ia).
CIT(A) is also not justified in holding that the fact of the assessee being the charitable organisation is of no relevance for the applicability of section 40(a)(ia).
Hon’ble Bombay High Court in the case of Bombay Stock Exchange vs DDIT [2014 (6) TMI 444 - BOMBAY HIGH COURT] held that where the income of the assessee was exempt under section 11 and the assessee was not carried on the business, section 40(a)(ia) had no application. Moreover, the insertion of Explanation 3 to Section 11 by the Finance Act, 2018 making inter alia the provisions of Section 40(a)(ia) applicable in case of charitable or religious trust or institution with effect from 1st April, 2019 further shows that section 40(a)(ia) hitherto was not applicable in computing income of entities registration u/s 12A of the Act. Disallowance made by the A.O. under section 40(a)(ia) and confirmed by the Ld. CIT(A) is not sustainable and deleting the same - Decided in favour of assessee
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2018 (5) TMI 1774
Addition of interest payable/paid by the Appellant on Fully & Compulsorily Convertible Debentures (FCCD's) as issued by it to its Associated Enterprise (AE) - addition u/s 153A on account of interest on FCCDs - Held that:- In the present case, it is an admitted fact that the assessee filed the original return of income for the year under consideration on 30.09.2009 which was processed u/s 143(1) on 05.09.2010 and the time period to issue the notice u/s 143(2) had already expired before the search took place on 29.10.2013. During the course of search, no incriminating material was found relating to the FCCDs which were already shown by the assessee in its regular books of accounts. AO/TPO made the addition on account of differential interest on FCCDs undertaken with the AE, in our opinion, no such adjustment could have been made to the income which was already assessed prior to the date of search.
Although the assessment was not framed u/s 143(3) but an intimation was issued u/s 143(1) of the Act, however, the time to issue the notice u/s 143(2) of the Act has already expired before the search. Therefore, for the purposes of Section 153A r.w.s. 153C an intimation u/s 143(1) of the Act was also an order of assessment. Since no incriminating material was found during the course of search. The addition made by the AO u/s 153A on account of interest on FCCDs was not justified.
Addition on account of differential rate of interest on FCCD - assessee applied the interest rate on the basis of SBI PLR rate plus 300 basis points for the reasons that the FCCDs being unsecured and hybrid/quasi equity instrument as compared to plain vanilla loan instrument - AO/TPO restricted the interest rate to 12.25% - Held that:- The variance in the rate of interest as per TPO/AO to be adjusted and added was 3.75% which was within the permissible range of 5% as permitted by second proviso to Section 92C(2). It is also relevant to point out that the percentage of 3% in the aforesaid proviso has been inserted by the Finance Act, 2012 w.e.f. 01.04.2013 and prior to that amendment, this percentage was at 5%. Since the difference is less than 5%, therefore, no addition on account of arm’s length price could have been made by the AO/TPO. As such on merit also, no addition could have been made. - Decided in favour of assessee
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2018 (5) TMI 1773
Levy of penalty u/s 271(1)(c) - non specification of charge - defective notice - Held that:- Notice issued by the A.O. for levy of penalty under section 271(1)(c) of the Act to be bad in law as it did not specify in which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing inaccurate particulars of income. The entire penalty proceedings are, therefore, vitiated and no penalty is leviable. See COMMISSIONER OF INCOME TAX & ANR. VERSUS M/S SSA'S EMERALD MEADOWS [2016 (8) TMI 1145 - SUPREME COURT ] - The orders of the authorities below are set aside and penalty is cancelled. - Decided against revenue
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2018 (5) TMI 1772
Reopening of assessment - assessee to show cause as to why the Capital Gains arising on account of transfer of property in question, should not be taxed in view of the provision of Section 50C - whether in the case of ‘JDA” transaction, at what point of time, capital gain arises? - Held that:- When the transfer is complete, automatically, consideration mentioned in the agreement for sale has to be taken into consideration for the purpose of assessment of income for the AY when the agreement was entered into and possession was given. The assessee has entered into ‘JDA’ in the year 10/01/2000 and possession was handed over for development.
But due to occupation of the property by the tenants, the developer was able to vacate the tenents only in the year 2003. Hence, it can be construed that the actual vacant possession was handed over to the developer only in 2003. Therefore, the actual transfer took place in the year 2003. The provisions of capital gains are attracted in the year 2003. Hence, the stand of the AO to charge the capital gains in the year 2010-11 is not proper. Secondly, the reason for bringing to tax in the year 2010-11 was the letter of the developer to announce that the building is ready for occupation without complying to the ‘JDA’ and approval norms. Even though the same was brought to the notice of the AO, according to us, the reason for reopening the assessment is on faulty ground.
The income chargeable to tax falls only in the AY 2003-04 and not in AY 2010-11. Therefore, the assessment completed u/s 144 r.w.s. 147 is held to be not in accordance with law, hence, the same is quashed - Decided in favour of assessee.
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2018 (5) TMI 1771
Addition on account of notional income under the head ‘Income from House Property’ made in respect of unsold flats shown as stock-in-trade - Held that:- In order to give relief to Real Estate Developers, section 23 has been amended w.e.f. AY 2018-19 (FY 2017-18). By this amendment, it is provided that if the assessee is holding any house property as his stock-in-trade which is not let out for the whole or part of the year, the annual value of such property will be considered as Nil for a period up to one year from the end of the financial year in which a completion certificate is obtained from the competent authority.
In the instant case, the assessee is a builder and developer. The issue of taxability is with regard to 51 unsold flats. The AY is 2012-13. In view of the insertion of sub-section (5) in section 23 by the Finance Act, 2017, w.e.f. 01.04.2018 narrated here-in-before, we set aside the order of the Ld. CIT(A) and allow the 1st ground of appeal.
Addition u/s 14A - Held that:- As per the balance sheet as at 31.03.2012, the partner’s capital account having a credit balance of ₹ 19,28,71,467/- is more than the investment in mutual funds to the tune of ₹ 51,45,000/-. Thus we delete the disallowance of ₹ 1,38,951/- made by the AO under Rule 8D(2)(ii).
As regard Rule 8D(2)(iii) While the fixed administrative expenses were excluded on the ground that in the case of a large corporate taxpayer they would be spread over a large number of voluminous activities, the variable expenses were computed at one-half per cent of the value of the investment - the disallowance of ₹ 25,725/- made by the AO under Rule 8D(2)(iii) is confirmed. Also the expenditure of ₹ 12,000/- directly related to income which does not form part of total income, disallowed by the AO under Rule 8D(2)(i) is confirmed. - decided partly in favour of assessee
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2018 (5) TMI 1770
Eligibility for approval u/s. 10(23C)(vi) - assessee as educational institution existing solely for the purposes of education OR for the purposes of profit - Held that:- The funds (or income) of the educational institution are (or, is) not to be utilized by the assessee-trust, owning and managing it, for any other (non-educational) object/purpose, which, as aforenoted, there are several (also refer para 2 of the impugned order/cl. 3 of the trust deed). That is as where the funds of an educational institution are used by the person in receipt thereof for any other purpose, even if charitable, it cannot be said that the said educational institution exists solely for (the purpose of) education. The same also contravenes the third proviso to section 10(23C)(vi). As perused the balance-sheets as at 31. 3. 2015 to 31. 03. 2017 to find no such diversion. The same being in the nature of a continuing condition could be stipulated by the competent authority while granting the approval. Subject to this, we find no valid reason not to grant approval to the assessee trust qua the Sutlej Public Senior Secondary School at Village Hawas, District Ludhiana.
We, vacating the findings by the CIT(E), direct the grant of approval under section 10(23C)(vi) to the assessee trust qua SPSSS, an educational institution existing solely for the purposes of education and not for the purposes of profit. This, of course, would be subject to the capital/funds of the school being not used for any other (non-educational) activity (object) by the assessee-trust, or any other condition deemed fit and proper, viz. as to maintenance and audit of school accounts separately, etc. , in accordance with and as contemplated by law, that the competent authority may impose while granting the said approval.
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2018 (5) TMI 1769
Recovery proceedings - amount recovered illegally during the stay application - Held that:- Since the amount recovered illegally during the stay application has been refunded by the Department to the assessee and the assessee at this stage is no more aggrieved; further the concerned officials have also tendered unconditional apology and also in view of our observations made above that these lower rank departmental officers have to succumb to the pressure of their higher ups for the sake of their service / career, we accept the unconditional apology tendered by the Assessing officer and Addl. CIT.
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2018 (5) TMI 1768
Additions u/s 50C - adopting sale consideration for the purpose of computing the capital gains - Held that:- As is the settled legal position in the light of Hon’ble Calcutta High Court’s judgment in the case of Sunil Kumar Agarwal Vs. CIT [2014 (6) TMI 13 - CALCUTTA HIGH COURT] Assessing Officer, discharging a quasi judicial function has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by the law. In the light of these discussions, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the Assessing Officer with a direction to refer the valuation of property to the Departmental Valuation Officer, and to frame the fresh assessment in the light of, inter alia, Departmental Valuation Officer’s report, in accordance with the law, after affording an opportunity of hearing to the assessee and by way of a speaking order. The matter thus stands restored to the file of the Assessing Officer in the terms indicated above.
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2018 (5) TMI 1767
Addition in the computation of short term capital gain arising to the assessee - mandation of reference to DVO - not providing assessee an opportunity for getting the value of the capital asset determined by the DVO - Held that:- AO ought to have given an opportunity to the assessee for making an application for the purpose of section 50C(2). When the assessee has disputed adoption of value equivalent to the amount on which stamp duty was paid, then the ld.CIT(A) itself ought to have called for a report under section 50C(2) of the Act.
The failure of the Revenue authorities for is an irregularity which deserves to be rectified. Therefore, we allow the appeal of the assessee; set aside both the orders and restore this issue to the file of the AO for readjudication. The ld.AO shall make reference under section 50C(2) to the DVO and obtain report of the DVO for deciding the value required to be deemed as full sale consideration for the purpose of computation of capital gain - Appeal of the assessee is allowed for statistical purpose.
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