|
Advanced Search Options
Income Tax - Case Laws
Showing 101 to 120 of 1116 Records
-
2015 (10) TMI 2695 - ITAT KOLKATA
Addition on account of short credit in rental income - CIT(A) deleting the addition in violation of Rule 46A of the I. T. Rules - Held that:- We find that the total debit transactions shown in the ledger account of Naresh Kumar & Co. Pvt. Ltd. was ₹ 27,67,094/-, which was wrongly bifurcated by the auditor into rent at ₹ 23,50,621/- and coordination activities at ₹ 4,16,473/-. Similar debit transactions of the ledger account have been reflected by the auditor as rental receipts. From these documents the assessee has clearly reconciled the discrepancy. Since, these documents were not placed before the AO and were placed before the CIT(A) for the first time, we are of the considered view that let this issue be examined by the AO and after verifying these documents he will adjudicate the issue. Accordingly, this issue of revenue’s appeal is set aside to the file of AO. Similar are the facts in AY 2007-08 and details were filed by assessee before CIT(A) for the first time, hence, for that reason the issue in this year also is set aside to the file of AO. Therefore, the issue of both the revenue’s appeals is allowed for statistical purposes.
Addition made on account of interest paid on loan - CIT(A) deleting the addition in violation of Rule 46A of the I. T. Rules - Held that:- We find that the claim of the assessee before CIT(A) was that this interest was paid on account of acquisition of flat at 9/1, Middleton Street on 31.03.2003 from Tata Iron & Steel Co. Ltd. As per the claim of the assessee, this property was acquired by taking a loan of ₹ 1 cr. from Standard Chartered Bank and claimed the interest relating to premises as allowable u/s. 36(1)(iii) of the Act since interest paid on asset which is being used as business asset is allowable as deduction. We find that the assessee is unable to bring the documents before the AO during the course of assessment proceedings but he subsequently produced these documents before CIT(A) for the first time and CIT(A) has also not referred these documents to the AO for verification. In terms of the above, we are of the view that the interest is paid for acquisition of business asset and the same is allowable but subject to verification of the AO. Accordingly, this issue is also set aside to the file of AO for verification. Therefore, this issue of both the revenue’s appeal is allowed for statistical purposes.
Disallowance on account of depreciation on house property - property was not put to use during the year - Held that:- Before us it was explained that the mode of computation of depreciation allowable under the Act had been shifted to 'Block of assets' concept, whereby the identity of an individual asset is completely lost. Now all assets having same classification and rate of depreciation would be clubbed together and the depreciation is to be computed on the entire block without distinguishing the same with reference to actual use, It may so happen that the asset may be in use but the value may be 'NIL' for reason that it's WDV is adjusted against the sale proceeds. Thus there is no provision in the Act which discriminates the allowability of depreciation on fixed assets on the basis of its use or any restriction had been provided in the statute as in the case of section 37(4); which has been deleted. Accordingly, we are of the view that the depreciation cannot be disallowed.
Deemed dividend addition u/s 2(22)(e) - Held that:- We find that, admittedly, Naresh Kumar & Co. Pvt. Ltd. has not given any loan to the assessee company even otherwise the balance arose due to transaction of purchase and sale of shares between assessee and Naresh Kumar & Co. Pvt. Ltd. No money has been advanced by Naresh Kumar & Co. Pvt. Ltd. to assessee. From the shareholding pattern it is also clear that the assessee is not a shareholder in Naresh Kumar & Co. Pvt. Ltd., which is the primary requirement for treating any loan as deemed dividend u/s. 2(22)(e) of the Act.
-
2015 (10) TMI 2694 - ITAT MUMBAI
Reopening of assessment - Addition u/s. 69 - Unexplained Investment - Held that:- AO had issued notice without proper recording of satisfaction and hence reopening of assessment is bad in law. Under the circumstances the proceedings initiated by the AO under section 148 is bad in law. - Decided in favour of assessee.
-
2015 (10) TMI 2693 - ITAT DELHI
Jurisdiction u/s 153C - NO satisfaction note prepared by AO - Held that:- Recording of satisfaction by the AO even in respect of the searched person was not fulfilled. - Decided in favour of assessee.
-
2015 (10) TMI 2692 - ITAT AHMEDABAD
TPA - selection of comparable - Held that:- Assessee is into marketing support services thus companies functionally comparable with that of assessee need to be deselected from final list of comparability.
Claim of deduction u/s 10B in respect of export incentives - Held that:- The provisions of sub-section(4) of section 10B of the Act mandate that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of export turnover by the total turnover. Thus, even though sub-section(l) of section 10B refers to profits and gains as are derived by a 100% EOU, the manner of determining such eligible profits has been statutorily defined in sub-section(4) of that section. Both sub-sections (1) and (4) are to be read together while computing the eligible deduction u/s 10B of the Act. We cannot ignore sub-section (4) of section 10B which provides specific formula for computing the profits derived by the undertaking from export. As per the formula so laid down, the entire profits of the business are to be determined which are further multiplied by the ratio of export turnover to the total turnover of the business. In case of Liberty India [2009 (8) TMI 63 - SUPREME COURT] the Hon. Supreme Court has dealt with the provisions of section 80IA of the Act wherein no formula was laid down for computing the profits derived by the undertaking which has specifically been provided under sub-section (4) of section 10B while computing the profits derived by the undertaking from the export.
-
2015 (10) TMI 2682 - ITAT CHANDIGARH
Addition on account of unexplained credit - treating the sum as unexplained money of the assessee partnership firm - non commencement of business - AY 2006-07 - Held that:- In the cases of 35 persons, loans have been returned after TDS and in some cases, Form 15H was filed where no tax have been deducted. Since no business activity has commenced in the year under consideration and the commercial production started on April 11, 2006 would clearly prove on record that the assessee was at pre-operative stage, i.e., for installing the plant for the purpose of manufacturing. Therefore, both the decisions in the cases of CIT v. Bharat Engineering and Construction Co. [1971 (9) TMI 14 - SUPREME Court] and Roshan Di Hatti v. CIT [1977 (3) TMI 3 - SUPREME Court] would squarely apply in favour of the assessee and would prove that the assessee has not earned any undisclosed income so as to make addition under section 68 of the Income-tax Act.
As regards the addition on account of 11 creditors it is clear that no addition on account of unexplained credit could be made against the assessee of the aforesaid sum because the assessee was in the process of installing the plant and has not commenced any business activities. Therefore, there is no need to discuss all the evidences in detail on record for the purpose of examining the creditworthiness of the creditors and genuineness of the transaction in the matter in the light of the case law relied upon by learned counsel for the assessee.
No justification to sustain the addition under section 68 of the Income-tax Act as is made by the Assessing Officer and confirmed by CIT(Appeals). We, accordingly, set aside the orders of the authorities below and delete the additions of ₹ 1,00,10,664 and ₹ 19,55,000. - Decided in favour of assessee.
For assessment year 2007-08 held that the issue is same as have been considered in preceding assessment year 2006-07, except that in the year under consideration, the assessee started commercial production of the unit and has therefore, started business activities on April 11, 2006. The assessee has taken loans from April, 2006 to October, 2006 as per the summary of the loan filed by learned counsel for the assessee and reproduced above. The same is supported by the complete details of loans received date-wise in the year under consideration. It is, therefore, clear that the assessee has raised the above loans during six months from the date of commencement of the production and business, i.e., from May, 2006 to October, 2006. In the case of CIT v. Bharat Engineering and Construction Co. [1971 (9) TMI 14 - SUPREME Court] the loans/cash credits were taken after commencement of the business in May, 1943 up to March 15, 1944, i.e., 11 months and additions have been deleted. - Decided in favour of assessee.
-
2015 (10) TMI 2677 - ITAT JAIPUR
Denying deduction u/s 80P(2)(a)(i) - whether the assessee bank neither fulfills the condition of Primary Agricultural Credit Society or Primary Cooperative Agricultural & Rural Development Bank nor does it functions as a Primary Agricultural Credit Society or Primary Cooperative Agricultural & Rural Development Bank but engaged in the activity as defined in Explanation 2 to Sub-section (4) of Section 80P? - Held that:- The department itself has allowed deduction U/s 80P(2)(a)(i) of the Act in A.Y. 2007-08, which has not been reopened U/s 148 and no order U/s 263 was passed by the department. The ld Dr had not brought on record any evidence that in preceding year, the Assessing Officer’s order in A.Y. 2007-08 had not been accepted by the department. By respectfully following the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd.(2014 (2) TMI 28 - GUJARAT HIGH COURT ) on identical issue, we hold that the assessee is a cooperative society not a cooperative bank and is entitled for deduction U/s 80P(2)(a)(i) of the Act. Assessee’s appeal is allowed
-
2015 (10) TMI 2676 - ITAT JAIPUR
Allowing the depreciation when the income was computed by the A.O. by applying net profit rate of 25% - Held that:- AO had not allowed the separate deduction on account of depreciation separately. IN A.Y. 2009-10, the ld Assessing Officer allowed the depreciation separately from the estimated income U/s 43(3) of the Act. The case law relied upon by the assessee i.e. CIT Vs. Jain Construction (1999 (9) TMI 26 - RAJASTHAN High Court) is squarely applicable wherein it has been held that in case of rejection of books of account of the firm and income estimated, the depreciation is allowable separately by considering the CBDT circular No. 29D(XIX) of 1965 dated 31/8/1965 wherein it has been provided that net profit rate is subject to allowance of depreciation and the depreciation allowance should be deducted therefrom. Therefore, we uphold the order of the ld CIT(A).
Addition made U/s 40(a)(ia) and 40A(3) - Held that:- It is found that the various Hon'ble High Courts as well as ITAT has decided this issue against and in favour of the assessee. The Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court) has held that when two opinions has been formed by the Hon'ble High Court, the assessee's favourable opinion is to be applied. Therefore, we uphold the order of the ld CIT(A) as Assessing Officer had rejected the books of accounts and had applied net profit rate for purpose of computing income no disallowance could have been made u/s 40A(3). In view of the above judicial pronouncements, no disallowance could be made U/s 40(a)(ia) and 40A(3) of the Act when assessment is made computing income by application of NP rate
-
2015 (10) TMI 2675 - ITAT DELHI
Adjustment for AMP expenses - AR has submitted that gross profit margin earned by the assessee being higher than gross profit margin by internal as well as external comparables, no adjustment for AMP expenses was required in the case of the assessee - whether we can compute the arms length price of the international transaction of AMP expenses in the given circumstances or we need to remit the matter back to the AO as submitted by the learned SR DR - Held that:- Authorised Representative has submitted that gross profits margin earned by the assessee being higher than gross profit margins earned by comparables companies, no adjustment is required for the purpose of computing arms length price of international transaction of AMP expenses. If the argument of the learned AR is accepted, it will lead us to a result where the AMP transaction will be rendered as non international transaction, as against the findings of the Hon’ble High Court in the case of Sony Erricsson (supra). The Hon’ble High Court has directed to find out AMP functions of comparables and compare the same with the AMP functions performed by the assessee and then after making adjustments if any compute the arms length price of the international transaction in bundled manner for distribution as well as AMP expenses and if not possible to compute in bundled manner, then only in separate manner. But in the case in hand the AMP functions performed by the external comparable are neither submitted by assessee before the AO/TPO nor examined by the TPO. The learned Authorised Representative has also failed to exhibit us the AMP functions carried out by the assessee and compare those functions with the AMP functions of the comparables and without that analysis the arms length price of the AMP functions cannot be determined at our level. We are also in agreement with the submission of the learned Senior Departmental Representative that the figures given in the tables by the learned Authorised Representative are not verifiable from the orders of the AO/TPO. In view of the above facts and circumstances, we are unable to determine the ALP of AMP expenses at our own either in the bundled or a separate approach.
We remit the matter back to the file of AO/TPO for determination of ALP on international transaction on AMP expenses, in accordance with the direction laid down by the Hon’ble High Court in the case of the assessee led by Sony Ericson Mobile Communication P Ltd (2015 (3) TMI 580 - DELHI HIGH COURT ). Needless to say that the assessee shall be afforded a reasonable opportunity of being heard.
-
2015 (10) TMI 2674 - ITAT DELHI
Penalty u/s 271(1)(c) - disallowance of foreign traveling expenses - Held that:- Penalty u/s 271(1)(c) of the Act can be imposed only when the assessee has concealed income or furnished inaccurate particulars of income. Where a deduction is claimed after making a proper disclosure, the mere fact that the disallowance has been made for a part of such deduction, it cannot be construed as a case covered u/s 271(1)(c) of the Act. CIT Vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) has held that no penalty can be imposed where a proper disclosure is made but the disallowance has been made by the Assessing Officer. In considered opinion, the learned CIT(A) was justified in not upholding penalty on this amount of disallowance.
Disallowance u/s 14A r.w.r 8D - Held that:- There cannot be any disallowance u/s 14A if there is no exempt income. As confronted with a situation in which the assessee has not earned any exempt income but the disallowance has been made to the extent of ₹ 13.64 lakh by applying Rule 8D. Despite there being no challenge to or sustenance of the disallowance u/s 14A, it is of considered opinion that under no circumstance, such ill founded disallowance, not having any authority of law to stand on, can be considered for the purposes of imposition of penalty u/s 271(1)(c) of the Act. Therefore, approve the view taken by the learned CIT(A) on this score.
Disallowance of credit card expenses - Held that:- This disallowance was made by the Assessing Officer on ad-hoc basis which fact is borne out from the assessment order itself. There is hardly any need to highlight that no penalty can be imposed where the disallowance of expenses has been made on an ad-hoc basis. Therefore, hold that the learned CIT(A) was justified in deleting the penalty on this account as well.
Decided against revenue.
-
2015 (10) TMI 2669 - SC ORDER
Entitlement to the benefit of Section 80P(2)(a)(i)denied - whether assessee is a Primary Co-operative Bank, thus hit by the exclusion provided in Section 80P(4)? - HC held that the three conditions as provided under Section 5 (CVV) of the Banking Regulation Act, 1949, are to be satisfied cumulatively and except condition (2) the other two qualifying conditions are not satisfied. Ergo, appellant cannot be considered to be a co-operative bank for the purposes of Section 80P(4) of the Act. Thus, the appellant is entitled to the benefit of deduction available under Section 80P(2)(a)(i) - Held that:- Delay condoned. Leave granted.
-
2015 (10) TMI 2664 - ITAT LUCKNOW
Registration u/s 12AA denied - non establishment of carrying out activities for charitable purposes - assessee incurred expenses in all the three years on account of National Championship, State Championship and affiliation entry fees was also paid to Wrestling Federation of India - Held that:- We find that the query letter issued by the Ld. CIT (Exemptions) on 11.03.2015 is available and as per the reply submitted by the assessee before Ld. CIT (Exemptions), we find that on all the query of the Ld. CIT (Exemptions), reply of the assessee was submitted before Ld. CIT (Exemptions) along with copy of letter of confirmation of affiliation by Wrestling Federation of India and U.P. Olympic Association.
In the facts of the present case, when the assessee has produced independent evidence to establish regarding its charitable activities by submitting certificate from Wrestling Federation of India and U.P. Olympic Association and when as per receipt and payment amount of the assessee for the last three years ending on 31.03.2012, 31.03.2013 and 31.03.2014, the assessee is incurring expenses on account of National Championship and State Championship and paid affiliation and entry fees to Wrestling Federation of India, the claim of the assessee cannot be rejected on this basis alone that books of accounts were not produced. Such affiliation certificate from Wrestling Federation of India and Uttar Pradesh Olympic Association are available on pages 9 and 10 of the paper book before us also. This is not the case of the Ld. CIT (Exemptions) that promoting Wrestling is not charitable activities. We feel that the assessee deserves registration u/s 12AA. Appeal of the assessee is allowed.
-
2015 (10) TMI 2662 - ITAT MUMBAI
TDS on commission payment - nature of payment- Held that:- We find that the agreement governing the commission was changed during the year under appeal, that the commission was to be paid after the receipt of the sale proceeds as per the new agreement, that the assessee had filed details of foreign commission for the year under consideration as per the revised agreement, that the details are available at page no.9 of the paper-book. A perusal of the details clearly show the full foreign commission expenses for the year under appeal and lead to the conclusion that the assessee had correctly made a claim about it. In our opinion, the said expenditure cannot be treated as prior period expenses. In our opinion, it is not necessary that agreement should be registered to be a valid agreement. We do not find any – thing illegal or wrong in the method adopted by the assessee for the year under appeal, So, we are reversing the order of the FAA and deciding the ground no.1 in favour of the assessee.
Addition on account of netting off of interest - treatment as ‘income from other sources' - Held that:- We find that the assessee had netted off the interest and made necessary entries in the books of account, that remaining interest was capitalised as stipulated by AS-16, that the loan taken by it was a term loan, that it could not be used for any other purpose except for the object it was taken, that due to delay in commissioning the plant it had parked the loan money with the bank. In our opinion, interest earned by it was directly linked with the business activity of the assessee. Therefore, same could not be taxed under the head ‘income from other sources’.
As the interest received by the assessee is inextricably linked with the process of setting up its plant and machinery, so in our opinion treatment given by the assessee in its books of accounts to the interest income is as per the provisions of Act. See Commissioner of Income-Tax Versus Bokaro Steel Limited [1998 (12) TMI 4 - SUPREME Court ] - Decided in favour of assessee.
Deduction claimed u/s. Section 80IB disallowed as relying on the previous assessment year assessment. - Decided against assessee.
-
2015 (10) TMI 2658 - ITAT DELHI
Levy of penalty u/s 221 (1) - Tax Deductor continued deducting the tax, but failed to deposit the same into the Central Govt. account within the stipulated time - assessee in default - binafied belief - CIT-A deleted the penalty - Held that:- No reason to interfere with the order of the CIT(A). The order was passed in the light of the Hon’ble Supreme Court decision in the case of Amit Mohan Bindal [2009 (8) TMI 44 - SUPREME COURT] saying that the penalty (in the context of section 271(1)(c)) is a civil liability albeit a strict liability. Irrespective of tfe fact whether the tax was deducted at source at the time of making payment of salary to the employees and paid beyond prescribed time limits or not deducted at the time of payment of salary but deducted and paid late, there remains no dispute that the appellant was in default in terms of the provisions of section 201(1) of the Act.
The only aspect that is to be seen is whether there was good, sufficient or bonafide reasons for not making compliance to the provisions of law. There is no doubt that the issue of deduction of tax at source from the salary of non residents expatriated to India has been debatable issue in as much as whether the tax was required to be deducted by their employer abroad while making payment in their country or by their joint venture partners in India. In the context of provisions of section 192 read with section 9 of the Act vis-a-vis the deduction of tax at source, the Hon 'ble Apex court in the case of CIT vs. Eli Lilly and Co. (312 ITR 225) has held that this was the first instance' that such an issue was examined by the Court. The Hon'ble Court also went ahead in holding that where the tax deductor was under a genuine and bonafide belief that it was not under an obligation to withhold taxes, there was no question of imposition of penalty as the assessees had been able to discharge the burden of showing reasonable cause for non deduction of taxes. The Hon'ble Court held that only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax.
The present case is not the case of the Revenue that the tax has been deducted but not paid to the credit of the company. Hence, we uphold the order of ld. CIT(A) and dismiss the appeal filed by the Revenue. - Decided in favour of assessee.
-
2015 (10) TMI 2656 - ITAT JAIPUR
Validity of reopening of assessment - whether CIT(A) grossly erred in initially in not deciding the ground challenging the validity and legality of initiation of the proceedings u/s 147 and subsequently during the proceedings u/s 154 before him, rejected this ground by holding summarily that assessment u/s 147 was properly reopened? - Held that:- In the case of Ranbaxy Laboratory (2011 (6) TMI 4 - DELHI HIGH COURT ), the Hon'ble High Court held that addition is not made by the AO on the ground of re-opening of assessment. As per explanation 3, no addition can be made. However, assessee's case is that the AO made addition u/s 80IB which has been allowed by the ld. CIT(A). However, he confirmed the addition by considering the explanation 3 of Section 147 of the Act. No such case laws were brought to the notice of the Bench where reopening was made by the AO on certain issue which has been considered for addition and also explanation 3 was applied. Thereafter, the ld. CIT(A) deleted the addition on reopening of the assessment u/s 147 of the Act. However, he confirmed the addition as per Explanation 3 of Section 147 of the Act. We therefore, dismiss assessee's Ground
Case reopened by applying explanation 3 of Section 147 - non affording any opportunity to the appellant regarding the applicability of this Explanation - Held that:- Hon'ble Rajasthan High Court in the case of CIT vs. Shri Ram Singh (2008 (5) TMI 200 - RAJASTHAN HIGH COUR ) held that if case is reopened on reason to believe of the AO but on that reason to believe no addition is made by the AO. The explanation 3 of Section 147 cannot be applied. Hon'ble Karnataka High Court in the case of N. Govindaraju vs. ITO and Another (2015 (8) TMI 271 - KARNATAKA HIGH COURT) has considered the issue of explanation 3 of Section 147 of the Act dissented view and held that even there is no addition on account of reason to believe, even addition can be made as per explanation 3 of Section 147 on other items. When there are two views on same issue, the issue favouable to the assessee should be considered in view of the decision in the case of CIT vs. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court). Thus Ground of the assessee is allowed.
Addition on account of sundry creditors treating as cash creditors - Held that:- We find from the records that the additional evidences were produced by the assessee before the ld. CIT(A) at the time of appeal hearing which can be verified from page 7 of the ld. CIT(A)’s order. Further the AO gave only one date i.e. 3-12-2007 and order was passed on 13-12-2007. Therefore, in the interest of justice, we admit additional evidence furnished by the party for disposal of this appeal. It is undisputed fact that these are old trade creditors except in once case the purchases during the year were made by the assessee. These are not the loans at all. The AO gave only one date to furnish the confirmation as to genuineness, creditworthiness and identity of the creditors which is not possible within a week’s time. The ld. CIT(A) was not right to hold that number of opportunities were provided to the assessee. In such a situation and facts of the case, we delete the addition confirmed by the ld. CIT(A).
-
2015 (10) TMI 2653 - ITAT BANGALORE
TPA - selection of comparable - Held that:- The assessee company is engaged in the manufacture of Printed Circuit Board Assembly which has application in the telecom, industrial electronics and consumer products segment. It also operated a shared services division for providing back office services relating to accounts payable processing and human resources record maintenance, thus companies functionally dissimilar with that of assessee need to be deselected from final list of comoarable.
Deduction under section 10A computation - setting off losses - Held that:- Since the issue is covered in the case of ACIT, 12(3) v. Yokogawa India Ltd., (2011 (8) TMI 845 - Karnataka High Court ), we are of the view that the DRP has erred in upholding the AO’s reasoning in recomputing the relief u/s 10A and thereby computed the relief u/s. 10A at Nil as against the amount of ₹ 60,892,020 claimed by the assessee in its return of income. This ground of appeal is allowed.
-
2015 (10) TMI 2649 - ITAT CHENNAI
Reopening of assessment - AO denied the benefit of 80lA by treating all the windmills together and there was net loss from the windmill activity all put together - Held that:- According to the Assessing Officer, all the windmills are to be treated as a single undertaking and therefore, the assessee would not be entitled to the relief allowed in the assessment passed u/s 143(3) of the Act. The CIT(A) rejected the claim of the Assessing Officer and observed that each windmill is to be considered independent and separate and as a consequence deduction u/s 80IA to be computed. As such, the issue in dispute travelled upto the Tribunal also at the instance of the Department. The Tribunal vide order [2014 (11) TMI 1121 - ITAT CHENNAI] agreed with the view of the CIT(A) and decided the issue in favour of the assessee.
As issue is already settled in favour of the assessee and the Assessing Officer precluded by taking the same issue for reopening of assessment after four years from the end of the relevant assessment year by reopening the concluded issue. - Decided in favour of assessee.
-
2015 (10) TMI 2648 - DELHI HIGH COURT
Additions made under Section 68 - Accommodation entries - Addition made in the case of the conduit companies - Held that:- In view of the orders passed by this Court in Pr. Commissioner of Income Tax v. Vijay Conductors India Pvt. Ltd. (2015 (9) TMI 1519 - DELHI HIGH COURT) and connected matters, the appeal is dismissed.
Considering the logical consequences of the order of the Settlement Commission as well as of Additional CIT under Section 144A, no hesitation to hold that the addition under Section 68 cannot be made in the case of the conduit companies. Therefore, we delete the addition made u/s 68 in the case of all the nine companies, which are admittedly conduit companies of Shri S.K. Gupta. - Decided in favour of assessee
-
2015 (10) TMI 2647 - ITAT HYDERABAD
TPA - comparable selection - Held that:- Assessee is engaged in providing software development services. The assessee has two software development centers in Chennai and Hyderabad, both of which are registered under the STPI scheme of Government of India as 100% export oriented units, thus companies dissimilar with that of assessee need to be deselected from final list of comparable.
Since the information considered by the A.O. said to be belonging to e-Infochips Bangalore Ltd., and the information filed by the assessee before us are at variance with each other, we deem it fit and proper to remand the comparability of this company with the assessee to the file of A.O./TPO to ascertain the correct facts and take a decision in accordance with law. It is no doubt settled by various judicial precedents that where segmental data is not available, such company cannot be taken as a comparable. Further, it has also been held that if there is an extraordinary event such as merger/amalgamation, even then, such company cannot be taken as a comparable to an assessee. The A.O./TPO shall take into consideration such judicial precedents before taking a decision about the comparability of e-Infochips Bangalore Ltd., with the assessee company. Accordingly, assessee’s appeal is treated as partly allowed for statistical purposes.
Infosys Technology Ltd., be excluded from the list of comparables on account of functional dissimilarity and owning of significant intangibles and brand value. As regards L & T Infotech Ltd.be excluded as segmental data is not available and was rejected by the TPO in the earlier years on this ground alone. As regards Tata Elxsi Ltd. this company be excluded on functional dissimilarity.
-
2015 (10) TMI 2646 - ITAT CHANDIGARH
Addition u/s 14A - Held that:- From the perusal of Profit & Loss Account, it appears that no interest to bank or otherwise was paid in the earlier year, which goes to prove that the investments having been made in earlier year were made out of owned funds of the assessee and no borrowed funds were used for such investments. As regards interest of ₹ 66,91,327/- being paid this year, it is seen from the perusal of Annexure-3 of the balance sheet that ICICI working capital limit amounting to ₹ 49,99,98,560/- was raised during the year, which was not there in the preceding year, which further goes to prove that the interest paid during the year does not have any nexus to the investments and thus not to the tax-free income from these investments having earned. Therefore, any disallowance of interest expenditure being related to earning tax-free income cannot be made in this case.
There is no need to go further on the issue of disallowance of interest part of the expenses related to earning tax-free income, as from the explanation and evidences brought on record by the assessee, as stated hereinabove, it is proved beyond doubt that the interest expenditure incurred by the assessee during the year does not have any nexus to earning of tax-free income.
As regards the administrative expenses part of the disallowance under section 14A the assessee has all along been contending before the lower authorities that there was no need for it to incur any such expenditure and it has in fact incurred no such expenditure, the Assessing Officer straightaway, without commenting on such claim of the assessee, embarked upon computation under Rule 8D of the Income Tax Rules for the purpose of section 14A of the Act. She has nowhere recorded her satisfaction that how such claim of the assessee is not acceptable to her. From the perusal of the whole order of the Assessing Officer, no such satisfaction can be inferred directly or indirectly. In such circumstances, the recording of satisfaction of the Assessing Officer is a must, as held in the case of CIT Vs. Deepak Mittal. (2013 (9) TMI 764 - PUNJAB & HARYANA HIGH COURT ). Therefore, in the circumstances, no disallowance on account of expenses under section 14A of the Act can be made. - Decided in favour of assessee.
-
2015 (10) TMI 2645 - ITAT BANGALORE
TPA - selection of comparable - Held that:- Assessee being a software development services provider thus companies dissimilar with that of assessee need to be deselected from final list of comparable.
Risk adjustment - Held that:- We of the opinion that the risk borne by the comparables as well as the assesee were of the very same nature and therefore the effect of the risk on the profitability already stood discounted in the operational results of the comparables. We therefore find no merit in this ground raised by the assessee. In the result, assessee’s ground relating to risk adjustment is dismissed.
Deduction u/s.10A computation - Held that:- Travel expenditure and telecommunication expenditure incurred in foreign currency ought not have been excluded from export turnover. Alternately it says that if they were excluded from export turnover, similar exclusion was to be done in the total turnover also for working out deduction u/s.10A of the Act.
In so far as the contention of the assessee that foreign currency expenditure should not be excluded from the export turnover, we are unable to appreciate in view of the definition of ‘export turnover’ given in Explanation 2 (iv) to Section 10A does not warrant such an interpretation. However in respect of parity between the export turnover and total turnover, in view of the decision of the Hon’ble jurisdictional High Court in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT], assessee has to succeed. We direct the AO / TPO to exclude what has been excluded from the export turnover from the total turnover also while computing deduction u/s.10A of the Act
Direct that assessee be given deduction u/s.10A of the Act without setting off brought forward loss and unabsorbed depreciation of non-eligible units.
............
|
