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Showing 501 to 520 of 1328 Records

• 2014 (4) TMI 829
  

  Allowability of deduction u/s 37(1) of the Act - Amount of service tax included with interest – Held that:- The Tribunal rightly was of the view that the liability has been crystallized in the year under consideration – revenue had not brought on record any material that the service tax including interest had been recovered from the parties for which it had rendered service - The expenses were incidental and arising out of the business of the assessee - The interest payment is compensatory in nature - The expenses have direct nexus with the business operation.

  Relying upon Commissioner of Income Tax v. Luxmi Devi Sugar Mills P. Limited [1990 (9) TMI 8 - SUPREME Court] - the amount was expended by the assessee during the course of business, wholly and exclusively for the purpose of business - If the assessee had taken proper steps and charged service tax to the service recipients and deposited with the Government, there was no question of assessee expending such sum - It is only because the assessee failed to do so, that he had to expend the said amount, though it was not his primary liability - this cannot be stated to be a penalty for infraction of law - payment of interest is compensatory in nature and would not partake the character of penalty – Decided against Revenue.

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• 2014 (4) TMI 828
  

  Exemption from the liability of the impact fee - Production of certificate of exemption u/s 80G of the Act – Charitable educational institution – Held that:- The fact that the Prescribed Authority Regulated Area has granted 15 days’ time to the assessee to produce the certificate from the Income Tax Department indicates that the Prescribed Authority Regulated Area would take into account the claim of the assessee in case the certificate u/s 80-G of the Income Tax Act is issued in favour of the assessee – it would be appropriate to grant time to the assesseee as prayed for to produce the certificate u/s 80-G of the Act.

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• 2014 (4) TMI 827
  

  Disallowance of 10% of claim of other expenses – No specific rejection placed – Vouchers not produced - Held that:- The Tribunal rightly held that neither the AO nor the CIT(A) had any material on record to reject the claim of the assessee - once the AO held that 90% of the expenditure was liable to be accepted, there was no reason for restricting the claim to 90% alone and disallow 10% - the issue is purely a factual one – Decided against Revenue.

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• 2014 (4) TMI 826
  

  Entitlement for deduction of ex-gratia payment - Whether the Tribunal was right in holding that the assessee is entitled for deduction of ex-gratia payment made to the employees since bonus cannot be paid as the employees are excluded from the category of bonus under the Payment of Bonus Act – Held that:- The Tribunal rightly was of the view that the payment was made to those employees who did not fall within the purview of the Payment of Bonus Act - Relying upon Commissioner Of Income-Tax Versus National Engineering Industries Limited [1993 (7) TMI 40 - CALCUTTA High Court] - the payment was a matter of business expediency – thus, the payment made by the assessee to its employees who were not covered under the provisions of the Payment of Bonus Act was in the nature of ex-gratia payment as an incentive to the employees to be considered for deduction u/s 37(1) of the Income Tax Act,1961 – the order of the Tribunal is upheld – Decided against Revenue.

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• 2014 (4) TMI 825
  

  Applicability of section 2(22)(e) of the Act – Deemed dividend – Scope of loans and advances - Amount received for the purpose of executing the construction work – Held that:- The amount received from M/s.Vista Securities Technics Pvt.Ltd., is stated to be to the tune of Rs.1,90,00,000/-, whereas the amount treated as deemed dividend in the order of assessment was to the tune of Rs.87,57,297 - this has no correlation to the assessed figure and the deemed dividend considered u/s 2(22)(e) of the Act to the extent of Rs.87,57,297 - apart from agreeing with the conclusion in the order of the Tribunal pointing out to the confusion in the assessment order, the ground also suffers from the same error - the assessee had executed work for the company in the nature of construction of buildings and the said transaction being in the nature of a simple business transaction – there is no justifiable ground to bring the case of the assessee within the definition of deemed dividend u/s 2(22)(e) of the Act – Decided against Revenue.

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• 2014 (4) TMI 824
  

  Validity of remission made by Tribunal - Admission of the suo-moto disallowance u/s 14A of the Act – Held that:- Revenue contended that the assessee had filed a return in which the disallowance was offered suo motu, the assessee could not have resiled from such position without filing a revised return - When all materials necessary to examine the nature of disallowance to be made u/s 14A of the Act are already on record and when once AO as well as CIT (A) have already considered the issue and given detailed findings, it would be appropriate for the Tribunal to give its final conclusive opinion on the entire issue – thus, the issue is placed before the Tribunal for consideration – Decided partly in favour of Revenue.

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• 2014 (4) TMI 823
  

  Addition of disallowance of ESIC contribution – Held that:- After hearing both the parties and in view of the admitted facts, which also forms part of the details submitted by the assessee in the paper book, that all the payments of ESIC have been made before the due date of filing of the return of income, the amount is allowable as deduction u/s 43B – Decided in favour of Assessee.

  Addition of advances written off – Held that:- The assessee had made deposits with the various Government Departments as per the tender requirement with various Government and Semi Government organizations as well as undertakings for getting the business in which the assessee is engaged i.e., inspection, verification, testing and certification services - The payments have been made in the form of demand draft / cheque at the time of tender submissions - The payments can very well be said to have been made in the course of business only - Once the amounts have not been recovered, the same results into loss - This aspect has not been examined either by the AO or by the DRP despite specific descriptions and details furnished – thus, the matter is remitted back to the AO for verification – Decided in favour of Assessee.

  Disallowance of deduction of right back of leave encashment – Held that:- The assessee has made a provision for leave encashment in the assessment year 2005-06 which was disallowed by the assessee itself in the computation of income and the same was added back - the view taken by the DRP cannot be sustained for the reason that it is not a new claim which is being made before the AO - If the assessee has written back the leave encashment on the basis of actuarial valuation, the same has to be allowed even though the assessee could not claim in the computation of income – thus, the matter is remitted back to the AO for verification of the claim – Decided in favour of Assessee. Non-grant of credit for TDS – Disallowance of TDS credit – Held that:- The issue needs to be remanded back to examine the conditions of Article 24 of the Indo- Korean DTAA and whether credit of deduction can be given - Decided in favour of Assessee.

  Addition on account of TPA – Technical fee paid to AE – Held that:- The Tribunal in assessee's own case for the previous assessment years have decided that the royalty @ 5% to 8% was accepted as per FIPB instruction issued by the Ministry of Commerce, Govt. of India - the assessee's payment of license fee @ 3% to its AE on the total turnover is at ALP - the rate of license fee @3% of the total turnover for the use of intellectual / intangible properties, is at ALP is accepted – Decided in favour of Assessee.

  Admission of additional ground - Benefit of Article 10 of India Switzerland DTAA – Liability for dividend distribution tax @ 10% - Held that:- The assessee has raised the contention that the correct tax liability for deducting the TDS is at 10% in view of the Article-10 of the India Switzerland DTAA which is admittedly applicable in the case of the assessee - there is no requirement for investigation or examination of facts albeit it is clearly borne out from the records – there is no reason to admit an additional ground which goes to the root of the tax liability of the assessee in accordance with the provisions of law – thus, the additional ground is admitted and the matter is remitted back to the AO for adjudication – Decided in favour of Assessee.

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• 2014 (4) TMI 822
  

  Validity of re-computation of deduction u/s 80HHC of the Act – Inclusion of income from sale of DEPB license in the profits – Held that:- The CIT(A) had rightly held that DEBP entitlement is available to the importer only after making the initial payment of custom duty and the credit of an amount equivalent to the duty paid is the available to the importer - Relying upon M/s Topman Exports Versus Commissioner of Income Tax, Mumbai [2012 (2) TMI 100 - SUPREME COURT OF INDIA] – The CIT(A) also rightly held that the credit of DEPB can be used to offset custom duty payable in respect of further imports - As per accounting principle, at the time of initial import, custom duty paid was debited to P&L account, therefore, when the corresponding credit was availed, a matching amount was shown as revenue receipt in the P&L account - the DEPB credit should be considered as a sum covered by the provisions of section 28(iv) of the Act –Decided against Revenue.

  Re-computation of deduction u/s 80HHC of the Act - Non-exclusion of interest from profits – Held that:- As decided in assessee’s own case for the previous year, it has been held that the context of Section 80HHC the interest income earned on fixed deposits having to be kept by the assessee for availing of credit facilities from bank, does not qualify as business income - The matter is remitted back to the AO for examination – Decided in favour of Revenue.

  Inclusion of interest income received from AEPC and banks – Held that:- As decided in assessee’s own case for the previous year, it has been held that, the expression "any profits and gains derived from any business of an industrial undertaking or an enterprise" appearing in sec. 80IA(1) has been referred to the business specified in sub section (4) of the said section. Sub section (4) does not include the business from earning of interest on FDRs - the interest income though may be in the nature of business income cannot be said to have been derived from the business of industrial undertaking within the meaning of sub section (4) of section 80IA - The decision in Pandian Chemicals Ltd. Versus Commissioner of Income-Tax [2003 (4) TMI 3 - SUPREME Court] followed – CIT(A) wrongly allowed the claim of the assessee treating the interest income as eligible business income – Decided in favour of Revenue.

  Reduction of book profits – Held that:- The decision in Ajanta Pharma Ltd. v Commissioner of Income Tax [2010 (9) TMI 8 - SUPREME COURT] followed - section 115J of the Act was a self-contained code and applied notwithstanding any provisions in the Act - section 115JB of the Act is the successor section to section 115JA and section 115JB of the Act continues to remain a self-contained code - 100% export profits earned by the assessee as computed u/s 80HHC(3) of the Act was eligible for deduction under clause (iv) of the explanation to section 115JB of the Act - the CIT(A) rightly directed the AO to recompute the income taxable u/s 115JB of the Act after allowing deduction u/s 80HHC of the Act as per earlier decision of the Tribunal – Decided against Revenue.

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• 2014 (4) TMI 821
  

  Refusal to grant registration u/s 12AA of the Act – Conditions necessary for registration u/s 12A(a) not fulfilled - Held that:- The main objects of the company to be pursued on incorporation are contained in clause A(1) of the Memorandum of Association, wherein it is clearly mentioned that "no objects of the company shall be carried out on commercial basis" - the winding up / dissolution clause is in conformity with the conditions laid down under the Act – the CIT, Jamnagar clearly erred in refusing to grant the registration sought by the assessee u/s 12AA of the Income-tax Act, 1961 – thus, the CIT is directed to read the clause X of Memorandum of Association and clause 52 of Articles of Association, wherein it is clearly stated that "if upon winding up or dissolution of the company there remains, after satisfaction of all the debts and liabilities any property whatsoever the same shall not be distributed amongst the members of the company but shall be given or transfer to such other company having object similar to the objects of this company" - The assessee is an Educational and Charitable Trust and issuance of registration u/s 12AA is a primary condition for the start of the charitable activity of the trust, therefore its case has to be decided on priority basis - Decided in favour of Assessee.

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• 2014 (4) TMI 820
  

  Allowability of Credit for TDS – assessee, an individual, claimed credit for tax deduction of source (TDS) on interest for ₹ 56.80 lacs received by her for and on behalf of an Association of Persons (AOP) - Held that:- The AOP returned the interest income on the bonds, with the assessee excluding the same from her return. Why, we wonder, then, the TDS could not be claimed in the hands of AOP? Tax deduction at source, it is to be appreciated, is only toward the charge of tax u/s. 4 of the Act and, therefore, credit for same would normally be to the person in whose hands the said income is assessable (u/s. 199(1)), and for the relevant year/s (ss. 199(2) & (3) r/w s. 190), being consistent and in accord with the scheme of the Act. That the said person has paid the tax in full on his own, or has not preferred to claim credit in respect of the TDS, is no ground for allowing credit to another.

  The amendment to sec. 199, as already clarified, is toward mitigating and resolving difficulties that may arise on account of the difference in the ostensible and the real owner of the underlying security (property) and the income thereon, so that on a declaration being made by the deductee, credit for TDS could be claimed by and allowed to the real (de facto) owner, even as the TDS certificate/s is in the name of the ostensible owner (deductee). Recourse to the rule 37BA, introduced subsequently (w.e.f. 01/04/2009), would arise only where the rule denies, as it did in some of the cases cited, credit to the AOP on the ground the TDS certificate being in the name of the assessee (deductee).

  Relying upon ITO v. Shri Anupallavi Finance & Investments [2010 (12) TMI 334 - ITAT, CHENNAI] the deduction of tax at source does not necessarily, or is required to, march alongside the corresponding income, recognition of which by the recipient could be either on accrual or on receipt basis - The tax liability would arise only on it becoming assessable - It is in view of and to address this mismatch in time between the TDS and the accrual and/or receipt of the corresponding income that section 199 r/w ss. 190 and 191 clarifies that the credit for TDS shall be available for the year/s in which the corresponding income is assessable - there was complete harmony between the erstwhile section 199 and section 199 as it stands after substitution by Finance Act, 2008 w.e.f. 01.04.2008 read with r. 37BA – Decided in favour of Revenue.

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• 2014 (4) TMI 819
  

  Penalty u/s 271(1)(c) of the Act – Held that:- The decision in COMMISSIONER OF INCOME-TAX Versus MAHENDRA C. SHAH [2008 (2) TMI 32 - GUJARAT HIGH COURT] followed - There is no payment of tax along with the return of income which was originally filed and payment of last tax has been made only subsequently after disclosing such income in the revised return of income which is not warranted by the language employed in exception No.2 so as to be entitled to immunity from penalty for concealment - there would be sufficient compliance with the provision if tax is shown to have been paid before the assessment was completed - when the statement is being recorded by the authorized officer it is incumbent upon the authorized officer to explain the provisions of Explanation 5 in its entirety to the assessee concerned and the authorized officer cannot stop short at a particular stage so as to permit the Revenue to take advantage of such a lapse in the statement - even if the statement does not specify the manner in which the income is derived, if the income is declared and tax thereon paid, there would be substantial compliance not warranting any further denial of the benefit under exception No.2 in Explanation 5 is commendable – Decided against Revenue.

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• 2014 (4) TMI 818
  

  Validity of assessment u/s 153C of the Act - Held that:- The condition precedent for assuming jurisdiction u/s 153C is seizure of article or thing or books of account or any documents belonging to the assessee concerned - AO has not referred to any seized material for making the additions in dispute - there is no material available before the AO leave alone any seized material on the basis of which the AO could have made the addition - The AO has simply relied upon the information submitted by the assessee in the original return filed by him prior to the date of search for making additions in question - there is no material before the AO either as a result of search or enquiry made by him, to come to the conclusion that the amount of Rs. 3,00,000/- and Rs. 5,00,000/- are unexplained income of the assessee - when admittedly there is no seized material belonging to the assessee, the AO could not have proceeded to make assessment u/s 153C of the Act – Relying upon Vijayabhai N. Chandrani Vs. ACIT [2010 (3) TMI 770 - Gujarat High Court] – there was no reason to interfere with the order of the CIT(A) – Decided against Revenue.

  Addition made on account of income from other sources – Held that:- The addition was made solely on the reason that the assessee has failed to establish that he was earning agricultural income by furnishing proper details and evidence - the assessee has shown the land as an asset and even though the confirmation letter mentions about payment of annual lease rental, but, there is no other evidence to show that Sri K. Subhash Chandra Bose was carrying on agricultural operation on the said land - the household card of Sri K. Subhash Chandra Bose mentions his annual income at Rs. 18,000 - it raises serious doubt as to how a person having annual income of Rs. 18,000/- can pay lease rental of Rs. 75,000/- to the assessee - The assessee has not at all proved with sufficient evidence that agricultural operation was being carried on the said land or it was generating income from agriculture – thus, there is no infirmity in the order of the CIT(A) in sustaining the addition as income from other sources – Decided against Assessee.

  Addition on account of gift received from Father-in-law – Held that:- Sri M. Krishnama Naidu has mentioned that he is owner of 2.97 acres of land and earning agricultural income of Rs. 80,000/- to Rs. 1 lakh per year - there is no other evidence produced by the assessee to establish that his father-in-law did actually earn agricultural income to the extent mentioned in the conformation letter - the gift has been made in cash and the donor Shri Krishnamma Naidu is not an income-tax assessee - there is no evidence produced by the assessee either to prove the capacity of the donor or the fact of earning agricultural income by him, the addition on that account is justified – Decided against Assessee.

  Disallowance of expenses incurred on development of the site – Held that:- CIT(A) was of the view that the expenses incurred for agricultural land development cannot be allowed since the sale of agricultural land and profit derived therefrom cannot be assessed for capital gains – there is no reason to interfere with the order of CIT(A) as the assessee has not produced even a semblance of evidence to prove the expenditure incurred towards development charges – Decided against Assessee.

  Addition of loss on account of sale of car – Held that:- The assessee had purchased a Santro car on 06/05/2003 for a consideration of Rs. 3,65,070/- and the said car was sold on 19/07/2007 for Rs. 2,35,000 - the assessee is estimating his income from business, the contention of the revenue that depreciation is deemed to have been allowed to the assessee requires to be looked into – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

  Admission of STCG on sale of site – Held that:- After perusing the details of purchase of land made by the assessee, the matter is required to tbe remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

  Deletion of unexplained cash credits – Held that:- CIT(A) has set aside the addition solely on the ground that they are made through banking channel - this may be correct in case of Smt. Santhoshamma in whose case Assessee furnished copies of bank account of the creditor as well as his own bank account reflecting the advancement of Rs. 5 lakhs - Smt. Santhoshamma worked as a head nurse also to a certain extent proves her capacity to make the gift - so far as the other two creditors are concerned, namely, Sri Sudhakar and Sri Ananda Kumar admittedly both are non-resident Indians residing outside India – thus, in their case strict proof of evidence is required with regard to creditworthiness and genuineness of the loan - it is required to be verified from their bank accounts whether they had source to advance the amount to the assessee - the CIT(A)'s finding with regard to the amount of Rs. 5 lakhs from Smt. Santoshamma is accepted but so far as loan of Rs. 4,17,670/- and Rs. 2,01,890/- from Sri Sudhakar and Sri Ananda Kumar are concerned, the matter is remitted back to the AO for verification – Decided partly in favour of Revenue.

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• 2014 (4) TMI 817
  

  Validity of reassessment order u/s 147 of the Act - Treatment of technology expenses – Mere change of opinion - Held that:- Neither the AO nor the DR was able to pinpoint, as to what material was gathered or came to light, which was resulted or indicated that there was an escapement of income, to attract reassessment proceedings - The issue was examined by the AO thread bear, is apparent from the fact that the disallowance made by the AO on technological expenses traveled up to the ITAT, itself proves the issue against the revenue authorities that they were proceeding on the aspect with a different reasoning - the law does not allow proceedings based on change of opinion from one incumbent to the other – Relying upon Kelvinator of India vs CIT [2002 (4) TMI 37 - DELHI High Court] - the AO has traveled beyond the statutory accord – Decided in favour of Assessee.

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• 2014 (4) TMI 816
  

  Validity of revised return - Whether Assessee's return filed along with TP report is to be considered or not – Held that:- When Assessee files a revised loss return reducing claim of loss, the return can certainly be considered as a revised return under the provisions of section 139(5) of the Act. First of all, the return filed originally on 28-10-2006 cannot be considered as a valid return as it did not include statutorily prescribed TP documentation and Assessee declared the value of international transaction as per its accounts books. Therefore, the other/revised return filed on 29-11-2006 enclosing TP documentation and declaration of higher value of international transaction by making suo-moto adjustment under the provisions of the Act cannot be rejected as the same was a valid return, even though, stated to be filed u/s 139(5) of the Act. In fact, to the extent of declaration of international transaction and adjustments, it can be certainly be stated as omission on the part of Assessee or in a worse situation a wrong statement in the original return, as provided u/s 139(5) - both the TPO and DRP erred in not considered the same, the AO is directed to consider the revised return as a valid return – Decided in favour of Assessee.

  Validity of AO’s adjustment – Suo-moto adjustment ignored - Whether adjustment made by the AO ignoring suo-moto adjustment made by the Assessee is correct or not – Held that:- Relying upon Haworth (India) P. Ltd. Versus Deputy Commissioner of Income-tax [2013 (8) TMI 421 - ITAT DELHI] - the TPO/DRP are not correct in not considering suo-moto adjustments made by Assessee - For arriving at the profit margins realized by the enterprise, suo-moto adjustment has to be taken into account in arriving at the difference to be added so as to make the 'net profit realised' to arrive at the arm's length price in relation to the international transaction as provided under 10B(e)(v) - The AO is directed to consider suo-moto adjustment made by Assessee accordingly – Decided in favour of Assessee.

  Adoption of operating cost - Whether operating cost adopted by TPO is correct or not – Held that:- Without considering the objections of Assessee, TPO determined the operating cost based on the proportionate cost on the ratio of sales in various segments - The action of the TPO was not justified at all when Assessee has maintained separate books of account, which was also accepted under the provisions of the Act - there is no reason for rejecting the same and estimating the operating cost on the basis of the proportionate turnover - Assessee has incurred loss in these transactions, whereas there was profit in other activity, which constitute 95% of Assessee's turnover - Taking sales as basis and arriving at the OP cost does not result in correct appreciation of Assessee's transactions - since segmental working is available on the basis of separate books of account maintained for EOU unit, operating cost has to be taken at Rs. 18,84,61,988/- and the TPO/AO is directed to take operating cost as stated – Decided in favour of Assessee.

  Invocation of threshold limit - Whether (+)/(-) 5% threshold limit available under the Act can be invoked – Held that:- The actual transaction undertaken by Assessee as reported is the sale at Rs. 17,17,79,149 - If the ALP determined by the AO/TPO is (+)/(-) 5% of this transaction on actual sales reported, then no adjustment is required - While making any adjustment, first step is to verify whether this (+)/(-) 5% threshold has exceeded when compared to actual transaction undertaken by Assessee, if yes, adjustment is required under the provisions of the Act - The next step is the quantification of adjustment which is to be made under Rule 10B(e) - suo-moto adjustment made by Assessee cannot be ignored and if any adjustment is required over and above suo-moto adjustment made by Assessee, difference only can be considered - the actual transaction undertaken by Assessee should be the base and not revised transaction reported by making suo-moto adjustment - the Assessee exercised option provided u/s 92C particularly of proviso of (+) or (-) 5% threshold and did not treat the actual sale transaction as ALP – no assessee cannot contend that the threshold of (-) or (+) 5% is available again, if TPO action results in further addition – Decided against Assessee.

  Selection of comparables – Held that:- There are two sets of objections on the comparables selected by TPO; one being data pertaining to companies which have different accounting period than that of Assessee and the second one being the functional comparability of selected companies, being in business of compressor manufacturing whereas adjustments were done in the segmented results of supply of components (to the compressors) - selection of comparables by TPO suffers from these basic deficiencies, the matter required re-examination – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

  Disallowance of depreciation – Held that:- If proper analysis was made there would not be any difference from the price paid to the price determined, as demonstrated before the TPO both on the basis of the third party quotations which are considered as internal CUP and the VG Bouw Certificates as external CUP - Under both the workings Assessee is able to justify the price paid - assessee justified the price paid by way of a certificate which can be considered as external CUP - TPO/DRP did not rely on any other certificate and in the absence of any contrary information, price paid by Assessee, which was lesser than the value mentioned in the certificate can be accepted as such- decided in favour of Assessee.

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• 2014 (4) TMI 815
  

  Disallowance of deduction u/s 10A of the Act - Whether the Assessee manufactures or produces "Computer Software" – Held that:- The nature of services rendered for which the Assessee receives foreign exchange can be established by the Assessee by tracing back each payment with the purpose for which the payment is received - There is no such correlation established by the Assessee - the nature of work to be performed for British Council, would be in the nature of, if not "manufacture or production of computer software", at least in the nature of "Data Processing" or "Engineering" or "Support Centre" which are all notified services for available the benefit of deduction u/s.10A of the Act - the Assessee has not established correlation between the receipts in foreign exchange and the nature of services rendered for which the payment was received - the Assessee has not made any attempts to demonstrate that it was engaged in production or manufacture of Computer Software or was rendering notified IT-Enabled Services.

  Whether the Assessee exported computer software/ITES out of India – Held that:- There can be no doubt on the satisfaction of this condition - Sample copies of Software Export Declaration (Softex) forms filed with the STPI (relating to/ corresponding to the invoices raised by the Assessee on overseas SAP entities) have been filed before the Revenue authorities - The Softex forms are certified by the STPI authorities as being exported out of the country - the arguments raised by the assessee are not being considered elaborately for the reason that the nature of services rendered needs to be ascertained first – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.

  Levy of interest u/s 234D of the Act – Held that:- Assessee contended that the interest u/s 234C of the Act, can be levied only when there is a shortfall in payment of advance tax instalment by considering the advance taxes paid on the tax due on the "returned income" and not the "assessed income" - the grievance has probably not been properly projected by the assessee nor appreciated by the CIT(A) in proper perspective - thus, the AO is directed to charge interest accordingly.

  Disallowance of staff welfare expenses – Held that:- The expenses are essential for the purpose of employee welfare, and clearly allowable as business expenditure - it is an industry-wide practice followed in India by IT companies - Such facilities are extended in the industry to ensure low employee attrition which will progress the growth of the Assessee - With effect from AY 2005-06, value of free food and non-alcoholic beverages provided by the employer to an employee is not even treated as "perquisites" in the hands of - even under the Fringe Benefit Taxes ("FBT") regime, though inapplicable for AY 2005-06, it may be pertinent to note that a specific exemption has been provided in respect of expenditure incurred on food or beverages procured by the employer for providing to his employees in an office or factory - such benefits not to be considered as the expenditure which would provide any benefit of a personal nature for the employees – there was no basis for disallowance of the remaining expenses out of staff welfare expenses also – Decided in favour of Assessee.

  Disallowance of sales promotion expenses – Held that:- The Assessee claims that it is responsible for advertising and promotion of SAP products in the Indian sub-continent and undertakes advertising for SAP products including designing product brochures, deciding the medium of advertising and developing advertising content for the products – thus, sales promotion expenses, being incurred wholly and exclusively for the purpose of the Assessee's business, are fully allowable as deduction u/s 37(1) of the Act – Decided in favour of Assessee.

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• 2014 (4) TMI 814
  

  Rectification of order – Error apparent on the record u/s 254 of the Act - Disallowance of deduction u/s 10A of the Act - Held that:- Relying upon The Commissioner of Income Tax-2. Versus Western Outdoor Interactive Pvt. Ltd. [2012 (8) TMI 709 - BOMBAY HIGH COURT] - In case there is no change in the facts and circumstances subsequent to the first year, which could have rendered the assessee ineligible for deduction under section 10A, the claim of the assessee cannot be denied in the subsequent assessment year when the same is accepted in the first assessment year – the direction for remitting back the case to the AO will not affect the claim of the assessee if there is no change in the facts and circumstances - the assessee has not made out a case of apparent error which can be rectified u/s 254(2) of the Income tax Act – Decided against Assessee.

  Transfer pricing adjustment – Selection of comparables – Held that:- The issue has been remanded to the record of AO/TPO to consider the segmental results - If the assessee has any doubt about the reliability of the data/details, then it would have been raised before the TPO/AO - the issue has been remanded for considering the segmental results and related party transactions in ITES segment, then there was no substance in the submission of the assessee – Decided against Assessee.

  Comparability of Infosys and Wipro – High turnover – Held that:- The finding has been given on examination and analysis of the facts and the assessee has not pointed out in the miscellaneous application any factual mistake in the facts which are considered by the Tribunal while giving the finding – Relying upon H.A. Shah & Co. v. CIT [1955 (9) TMI 53 - BOMBAY HIGH COURT] - if while deciding a case the First Tribunal did not have a particular material before it and if the second Tribunal is satisfied that if those material facts have been taken into consideration the decision of first Tribunal would have been different, it would justify the second Tribunal in not adhering to the decision of the first Tribunal – thus, when the issue has been decided after considering certain vital facts which were not before the Co-ordinate Benches relied upon by assessee then taking a different view on the basis of new facts would not amount to taking a divergent view of the matter on same facts, material and aspects already considered - nothing has been brought on record by the assessee to show how the brand value has an influence on the margins in the case of the comparables - no quantitative details of the adjustment if any on account of brand value are given – Decided against Assessee.

  Comparability of Maple-Esolution Ltd. – Allegation of fraud against the director - Held that:- It is clear from the finding of the Tribunal that the objection was found not relevant for the business of the companies and for the year – Decided against Assessee.

  Comparability of Eclerx Services Ltd – Held that:- Once the issue has been decided by the Tribunal by holding that the company providing data processing and data analysis service is similar to the services of the assessee then it becomes irrelevant whether the assessee has raised the objection before the authorities below or not – Decided against Assessee.

  Comparability of Mold Tex Technologies Ltd – Tolerance range of related party transaction - Held that:- It is clear from the finding of the Tribunal that the tolerance range of 15% was taken in the case of assessee by considering the various decisions of the Tribunal wherein this range has been considered from 0-25% - The assessee's grievance is against reasoning and view of the Tribunal and not against any error or mistake apparent on record – Decided against Assessee.

  Justification of carrying out fresh search by the TPO – Held that:- The Tribunal has not taken any divergent view from the views in the other cases - when the TPO itself did not choose to carry out further search then issue of justification of TPO did not arise before the Tribunal – thus, there was no substance in the arguments of the assessee – Decided against Assessee.

  The scope of section 254(2) is very limited and circumscribed - For exercising jurisdiction u/s 254(2) it is mandatory condition that such mistake should be vide apparent manifest, and patent on record and not something which involve serious circumstances of disputes of question of fact or law - Section 254(2) does not confer power on the Tribunal to review its earlier order - the Tribunal has no power to review its order passed on merits and in the garb of rectification of mistake no order can be passed u/s 254(2) which amounts to reversal of order passed after discussing all facts and statutory provisions in detail – Decided against Assessee.

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• 2014 (4) TMI 813
  

  Deletion of estimated addition of interest – Violation of Rule 46A of the Rules – Admission of additional evidence – Held that:- CIT(A) has correctly accepted the additional evidences - It cannot be said that AO was denied any opportunity to go through the additional evidences - AO has asked three months time, for submission of the Remand Report, CIT(A) has duly given the time - AO did not analyze the additional evidences properly - CIT(A) evaluated the additional evidences and gave a very cogent and speaking order on all issues concerned – thus, the AO has been given proper opportunity by the CIT(A) to examine the additional evidence - CIT(A)’s order cannot be said to be suffering from any shortcoming – Decided against Revenue.

  Deletion of investment in property – Held that:- The assessee has duly explained that the property was purchased by assessee jointly with Smt. Swati Paliwal, with each of them made an investment of Rs. 1 crore - The assessee has duly explained that she has paid her share of Rs. 1 crore for purchase of land through her bank account - it has been duly explained that other expenses on account of stamp duty and Registrar fees was shared 50:50 by her along with co purchaser Smt. Swati Paliwal - As regards the source, the assessee has duly explained that she had taken a loan of Rs. 1 crore from her husband Sh. Mahender Pal Paliwal by transfer from his account - The original source of money in the hands of the family of the assessee as well as Smt. Swati Paliwal was amount received as compensation on account of acquisition of land by the Government - CIT(A) rightly held that the assessee has submitted all the necessary documents to establish the genuineness and veracity of the source of investment – Decided against Revenue.

  Claim of agricultural income – Agricultural income treated as income from other sources - Held that:- CIT(A) has noted that assessee has submitted a copy of ownership of agricultural land and earning of agricultural income. - The assessee submitted that she has been earning agricultural income regularly and she had also declared the same in the Asstt. year 2005-06, 2006-07 and 2007-08 which has been accepted by the Department - CIT(A) has held that the AO has made a mistake by assessing an agricultural income declared by the assessee at Rs. 1 lakh under the head ‘income from other sources’ – the order of the CIT(A) upheld as the assessee has duly established the ownership of land – Decided against Revenue.

  Addition of interest income on FDR – Held tha:- CIT(A) was of the view that the assessee has submitted complete details of FDRs along with interest and TDS deducted, copies of Form No. 16A was also enclosed - CIT(A) held that adhoc addition made by the AO by mentioning that the value of principal amount invested in FDRs is not disclosed and in the absence of details the interest income is taken at Rs. 5.50 lacs as against Rs. 3,43,026/- is not tenable – Decided against Revenue.

  Deletion of capital gain – Held that:- CIT(A) set aside the additions on the submissions made by the assessee, the assessee had dealt with the purchase and sale of the shares during the year under consideration - The details of purchase and sale of shares were filed along with return of income and the assessee had incurred a loss - these were declared in the computation of income - the loss was not adjustable under any other head being Short Term Capital Loss, therefore, the income under the head ‘Capital Gain’ was taken at NIL - CIT(A) properly taken into account the submissions made by the assessee - Assessee has submitted the details of share transactions made by her – thus, the order of the CIT(A) upheld – Decided against Revenue.

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• 2014 (4) TMI 812
  

  Deletion made u/s 68 of the Act – Onus to prove – Creditworthiness of the creditors – Held that:- The assessee has given the confirmation in respect of all the creditors, copy of their income tax returns, identity proof, PAN proof, balance sheet, copy of bank statement as well as source of funds from where they invested in the share capital - the onus is upon the assessee to prove the credit in his books of account - To discharge such onus, the assessee has to establish the identity of the creditor, the creditworthiness of the creditor and genuineness of the transaction - the identity of the share applicants cannot be doubted - All the money has come by cheque, all the share applicants have confirmed the same and the amount is duly debited in the share applicants' bank account - the genuineness of the transactions also cannot be doubted - the capital of each and every creditor is much more than the investment made by him in the share capital - The amount has duly been disclosed in their balance sheet which is also furnished by the assessee before the AO - the assessee was able to discharge the onus of proving the credit in the form of share application money of its books of account – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue.

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• 2014 (4) TMI 811
  

  Deletion of allowance u/s 40(a)(ia) of the Act – Payment of commission u/s 194H of the Act – Held that:- CIT(A) rightly set aside the disallowance on the basis that since the commission income earned by the assessee and commission expenditure incurred by the assessee were in relation to securities, as per the provision of section 194H, no TDS was required to be deducted on such expenditure and consequently, no disallowance is to be made u/s 40(a)(ia) of the Act for this amount - the decision in Deputy Commissioner of Income-tax Versus SJ. Investment Agencies P. Ltd. [2011 (2) TMI 1427 - ITAT MUMBAI] followed - as per Explanation (i) to section 194H, no TDS was required to be deducted from such payment of commission because it is in relation to securities - payment of commission in relation to securities is covered by explanation (i) to section 194H and hence, TDS is not deductible – Decided against Revenue.

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• 2014 (4) TMI 810
  

  Admission of additional grounds - Exclusion of income and expenditure relating to demerged units – Held that:- Assessee company was declared a sick industrial company by the Board for industrial and financial structuring (BIFR) - The revised rehabilitation scheme stipulated inter alia demerger of 3 units of the assessee - assessee’s original return of income was filed on the basis of then available audited accounts which included the profit/loss of the demerged units - Assessing Officer passed assessment order dated 21.12.2009 which was based on the claims / figures as per original return of income – thus, assessee could not file the revised return along with the revised financial statements before the Assessing Officer and the same were filed before the Ld. CIT(A) as additional evidences under Rule 46(A) of the Income Tax Rules – the additional grounds are admitted - CIT(A) should have adjudicated the additional grounds of appeal raised by the assessee seeking exclusion of income and expenditure relating to demerged units – Decided in favour of Assessee.

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