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Income Tax - Case Laws
Showing 81 to 100 of 687 Records
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2017 (2) TMI 1412
TDS u/s 195 - non-deduction of tax at source in respect of the payments made outside India to non-resident film producers for distribution of their films in India - addition u/s 201(1) and u/s 201(1A) - assessee has purchased rights to exhibit the cinematographic films in various mediums for a certain period of time - whether payments made to non-resident film producers is royalty under section 9(1)(vi) ? whether payments made towards rights for exhibition and telecasting of cinematographic films in different platforms like television and satellite broadcasting did not constitute payments for sale, distribution, exhibition of cinematographic films? - HELD THAT:- The law has expressly excluded consideration paid for exhibition of cinematographic films from the ambit of section 9(1)(vi). Further, irrespective of the medium in which the cinematographic films have been exhibited, the same only constitutes “exhibition of cinematographic films”. Hence, the consideration paid by the assessee to the non-residents does not fall within the ambit of “royalty” u/s. 9(1)(vi) of the Act. We find that section 90(2) of the Income tax Act which states that either the provisions of the Income tax Act or the DTAA, whichever is more beneficial to an assessee, would be applicable to the assessee. Further, CBDT Circular No.728 dated 30.10.1995 clarifies that tax should be deducted at source as per the provisions of the Act or DTAA whichever is more beneficial to the assessee. Since the provisions of the Act are beneficial to the assessee, the same would apply and consequently the sums are not chargeable to tax in India and do not warrant deduction of tax at source u/s 195 of the Act.
Hon’ble Supreme Court in the case of GE India Technology Cen. (P) Ltd vs CIT [2010 (9) TMI 7 - SUPREME COURT OF INDIA] had held that TDS obligation would arise on the assessee only when the sum is chargeable to tax in India u/s 4, 5 & 9 of the Act.
We hold that the assessee in the instant case cannot be treated as assessee in default u/s 201(1) of the Act and consequently the interest u/s 201(1A) of the Act could not be levied on the assessee. Accordingly, the grounds raised by the assessee are allowed.
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2017 (2) TMI 1411
Condonation of delay - reasons for delay - sufficient cause - delay of 87 days in filing the appeal before this Tribunal - reasons too vague and genera - Finance Manager, who was handling the tax matters, had resigned from the office during the month of February,2016 and did not hand over the relevant assessment order and other documents to the successor while relieving from the office of the petitioner causing delay - HELD THAT:- As seen from the petition, filed by the assessee, the assessee has not mentioned the name of Finance Manager, who has received the impugned the assessment order, against which the assessee is in appeal before us. It is also not mentioned the date on which the Finance Manager was relieved from the duty and the reason on which he was not handed over the appeal documents to the assessee for further action.
The reasons advanced by the assessee in its condonation petition are very vague and it was too general. The reasons advanced by the assessee cannot be considered as a reasonable one so as to condone the delay of 87 days. The approach of the assessee herein is very casual and requires no sympathy from our end, since he has not shown good and sufficient reasons to condone the delay.
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2017 (2) TMI 1410
TP adjustment - selection of comparable - functionally comparable -inclusion of R systems international Ltd alone - Different Financial year - HELD THAT:- ssessee has made out a case, supra, we remit this matter to the TPO for re-examination and readjudication.
TP adjustment - selection of comparable - functinal dissimilarity - ICRA Online Ltd, with unadjusted margin of 43.39%, has to be rejected for the reason that it is not functionally comparable and fails export earning filter. - HELD THAT:- assessee has made out a case, and hence direct the TPO to exclude the above comparables.
Provision for bad and doubtful debts as non-operating in nature - HELD THAT:- The provision for doubtful debts fit the description of "operating items" associated with the rendering of services and should be considered as part of the operating costs and relied in case of Techbooks International Pvt. Ltd. Vs. DCIT [2015 (7) TMI 473 - ITAT DELHI]. Thus Provision for bad and doubtful debts should be treated as operating expenses as they are closely linked with the business operations and accordingly direct the TPO to do so.
Computation of working capital adjustment - TPO is of opinion that working capital adjustment should be restricted to 0.85% - HELD THAT:- TPO has not given the basis of arriving at the average cost of capital of the comparable companies. As assessee relied on the decision of this Tribunal in Moong Controls India P Ltd [2015 (11) TMI 1719 - ITAT BANGALORE] wherein as directed the TPO to allow actual adjustment towards the differences in the of working capital position between the assesseee and the entrepreneurial companies selected as comparable . We direct the TPO to follow this decision.
Non providing appropriate risk adjustment - assessee is a captive contract IT enabled service provider to its AEs. - HELD THAT:- In the case of Chryscapital Investment Advisors (India) Pvt. Ltd. Vs DCIT [2015 (4) TMI 949 - DELHI HIGH COURT], wherein held that appropriate adjustments should be carried out in situations where there are differences between the tested parties and comparables and in case such differences perceptible in the comparables cannot be eliminated on account of adjustments or otherwise, then such comparables have to be rejected. We heard the rival submissions and find that the assessee has made out a case, supra, and hence direct the TPO to make appropriate risk adjustment.
Depreciation adjustment on account of difference in the rates of depreciation of the assessee vis- à-vis comparable companies - HELD THAT:- The arithmetic mean OP/ TC margin (post factoring the impact of depreciation) of the comparable companies considered by the TPO is 22.80% which falls within the + / -5% range of the OP / TC margin of 17.63% (as computed by the TPO) earned by the assessee during the FY 2009-10. Accordingly, the prices of international transactions of the assessee in relation to provision of IT enabled services comply with the Arm's Length standard prescribed under the Indian Regulations.We remit this matter to the TPO for re-examination and re-adjudication
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2017 (2) TMI 1405
Disallowance u/s. 40A(3) - cash expenditure of the assessee exceeding permissible limits - Held that:- It is not disputed that assessee has produced books of accounts before AO. In fact the assessment order specifically states so. Rigours of Sec. 40A(3) is attracted only where payments in relation to expenditure exceeded A 20,000/- in a day to a person. In our opinion, methodology adopted by the ld. Assessing Officer was incorrect and ld. Assessing Officer ought have compiled the instances of cash payments if any in excess of the limits, from the cash book maintained by the assessee. Thereafter he should have called for explanation of the assessee, in each case for which there was excess cash payment. In the facts and circumstances of the case, we are of the opinion that the issue requires a fresh look by the ld. Assessing Officer. We set aside the orders of the lower authorities and remit the question for reconsideration - Appeal of the assessee allowed for statistical purpose
Levy of penalty u/s.271B - failure to conduct the Audit under section 44AB of the Act and to furnish the reports - Held that:- It is not sufficient that an explanation is given. Such explanation has to be proved and substantiated. Nothing has been brought on record by the assessee to substantiate its argument that its Accountant had resigned or to show that non compliance with the statutory provisions was due to difficulties beyond the control. Assessee was in the business since many years. For the preceding assessment year also assessee had filed its tax audit report belatedly. We are thus of the opinion that assessee could not bring out any reason which could be termed as reasonable. In our opinion, levy of penalty u/s.271B of the Act was justified. - Decided against assessee.
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2017 (2) TMI 1404
Denial of deduction under Section 80P - assessee a Co-operative Bank claimed deduction - Held that:- As rightly submitted by the assessee, the Madras High Court in the assessee’s own case [2017 (4) TMI 181 - MADRAS HIGH COURT] found that the assessee Co-operative Bank is not a bank and it is only a credit society. The High Court further observed that the activity of the assessee in accepting deposits, advancing loans etc., are confined only to its members and also restricted to a particular geographical area. Therefore, the High Court found that the assessee’s society is eligible for deduction under Section 80P(2)(a)(i) - no reason to interfere with the order of the lower authority. Accordingly the same is confirmed. - decided against revenue
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2017 (2) TMI 1403
Addition under Section 69C - AO bringing to tax the amounts disallowed in the course of search assessment under Section 153C - Held that:- Delay condoned - leave granted
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2017 (2) TMI 1400
Charitable activity - Grant of benefit u/s 12A denied - activity of the applicant could not be termed as charitable within the meaning of section 2(15) and there were huge surpluses and accounts were not audited and returns of income for such years in which total income exceed ₹ 50,000/- were not filed alongwith Form No. 10B - Held that:- The issue is squarely covered by the decision of Director of Income Tax (Exemptions) vs. Spic Educational Foundation [2001 (11) TMI 22 - MADRAS HIGH COURT] wherein held non - filing of the audit report in Form No. 10B of the Income Tax Rules, 1962, would not defeat the claim of the assessee for exemption under Sections 11 and 12
The registration U/s 12A of the Act for entitlement to claim the benefits U/Ss 11 & 12 of the Act requires two conditions to be fulfilled, firstly that the person concerned should have made an application for registration in the prescribed form and in the prescribed manner to the authorities named in that section before the first day of July, 1973, or before the expiry of the period of one year from the date of the creation of the trust or establishment of the institution and secondly, the person concerned would deep the accounts in a particular manner and such accounts should be audited. Thus the assessee has fulfilled both the conditions and the delay in making the application for registration has also been successfully explained and that being sufficient cause for the delay, we condone the delay with direction to the Ld. CIT to grant the registration on the application filed by the assessee for the purpose in Form No. 10A before Ld. CIT on 27.3.2005 for the claimed period. - Decided in favour of assessee
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2017 (2) TMI 1399
Disallowance of expenses debited as cost of ESOP in profit and loss account - allowable deduction u/s 37 - Held that:- The issue stands covered in favour of the assessee and against the Revenue by the order of this court in CIT v. Lemon Tree Hotels Ltd. [2015 (11) TMI 404 - DELHI HIGH COURT]. The court had affirmed the order of the Income-tax Appellate Tribunal deciding the issue in favour of the assessee in the said case where the addition made by the Assessing Officer by way of dis allowance of the expenses debited as cost of ESOP in profit and loss account was deleted by the Income-tax Appellate Tribunal.
In the present case, the Income-tax Appellate Tribunal has by the impugned order restored the matter to the file of the Assessing Officer for re-adjudication. The impugned order of the Income-tax Appellate Tribunal is consistent with what has been held by this court in CIT v. Lemon Tree Hotels (supra) wherein held Tribunal held that it was not a case of contingent liability depending on the various factors on which the assessee had no control. The expenditure in this behalf was an ascertained liability, thus the expenditure incurred being on lines of the SEBI guidelines, there could be no interference in the relief granted by the assessing authority for the expenditure arising on account of the employees' stock option plan. This expenditure incurred as per the SEBI guidelines and granted by the Officer could not be considered as erroneous. No substantial question of law.
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2017 (2) TMI 1396
Charitable activity u/s 2(15) - 'hostel facility' of the school provided exclusively to students of the school - whether not an integral part of "education" u/s 2(15) - but is a separate business activity in terms of section 11 (4A)? - Income for 'charitable purposes' - Held that:- Referring to the order of Director of Income Tax (Exemption) vs. Indraprastha Cancer Society [2014 (11) TMI 733 - DELHI HIGH COURT] wherein has held that where a charitable institution, which has purchased capital assets and treated amount spent on purchase of capital asset as application of income, is entitled to claim depreciation on same capital asset utilized for business. - Decided in favour of assessee
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2017 (2) TMI 1395
Revision u/s 263 - Order erroneous or prejudicial to revenue - Held that:- The view so taken by the Assessing Officer without making the requisite inquiries or examining the claim of the assessee will per se be an erroneous view and hence will be amenable to revisional jurisdiction under Section 263. Second reason is that it is not taking of any view that will take the matter under the scope of Section 263. The view taken by the Assessing Officer should not be a mere view in vacuum but a judicial view.
It is difficult to comprehend as to how the Assessing Officer can be attributed to have "adopted" a permissible course of law or "taken" a view where two or more views are possible when the order passed by him does not speak in that behalf. We cannot assume, in order to provide legitimacy to the assessment order, that the AO has adopted a permissible course of law or taken a possible view where his order does not say so. The submissions made by the learned Counsel, if accepted, would require us to form, substitute and read our view in the order of the AO when the AO himself has not taken a view. It could have been a different position if the AO had "adopted" or "taken" a view after analysing the facts and deciding the matter in the light of the applicable law. However, in the case before us, the Assessing Officer has not at all examined as to whether only one view was possible or two or more views were possible and hence, the question of his adopting or choosing one view in preference to the other does not arise.
The provisions of Section 263 would lose significance if they were to be interpreted in a manner that prevented the Commissioner from revising the erroneous order passed by the Assessing Officer, which was prejudicial to the interest of the revenue. In fact, such a course would be counter-productive as it would have the effect of promoting arbitrariness in the decisions of the Assessing Officers and thus destroy the very fabric of sound tax discipline. If erroneous orders, which are prejudicial to the interest of the revenue, are allowed to stand, the consequences would be disastrous in that the honest tax payers would be required to pay more than others to compensate for the loss caused by such erroneous orders.
Thus we are of the view that the orders passed on an incorrect assumption of facts or incorrect application of law or without applying the principles of natural justice or without application of mind or without making requisite inquiries will satisfy the requirement of the order being erroneous and prejudicial to the interest of the revenue within the meaning of Section 263. Accordingly we do not find any infirmity in the order of CIT and we confirm the same. - decided against assessee.
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2017 (2) TMI 1394
Treatment to copyright expenses - nature of expenses - revenue or capital expenditure - Held that:- The assessee had claimed copyright expenses and justified the claim stating that the same was paid for the purpose of use of copyright of products like songs, images video clips, games etc. for development of value added services for the telecommunication companies. ITAT after going through the relevant clauses of the copyright agreement, concurred with the assessee and held that the assessee had merely acquired the right to use the copyrights and had not become the owner of the copyrights/license and thus the expenses were revenue in nature.
The assessee has merely acquired right to use the copyright. The perusal of the Agreement with M/s Phonographic Performance Ltd. shows that license has been granted only for usage of the copyright. The above clearly shows that license was only for usage of copyright held by the licensor. The assessee has not become the owner of the license. Therefore, clearly the payment is of Revenue nature - Decided in favour of assessee.
Disallowance of excess depreciation claimed treating the superstructure as temporary structure - Held that:- The said opening WDV has been satisfactorily explained by the assessee as having been on account of the fact that part of the expenditure was incurred in the preceding year which was shown as opening WDV of the temporary structure and the assessee has rightly claimed depreciation in the impugned year when the said temporary construction was completed and the asset put to use. Moreover, we find that there is no basis with the Revenue to hold that the construction of the said structure was prohibited by law and was an offence as rightly pointed out by the CIT (Appeals). The Ld.CIT(Appeals) has rightly pointed out that even as per the Assessing Officer there was a bar on building/constructing "permanent" structures in the area where the assessees office was located. The said structure, undisputedly, was a "temporary" structure and thus there was no breach of law by the assessee by creating it. Therefore, we agree with the CIT(Appeals) that no disallowance could have been made u/s 37 (1) of the Act also.
We concur with the CIT (Appeals) that the temporary structure having come into existence in the impugned year and thus put to use in the impugned year, the assessee was entitled to depreciation @ 100% on the same and the disallowance made by the Assessing Officer, we hold, has been rightly deleted by the Ld. CIT (Appeals).
Treatment of royalty expenses as revenue in nature has already been settled in favour of the assessee by the Hon'ble Punjab & Haryana High Court in appeals pertaining to preceding years.
TDS u/s 194A - addition u/s 40(a)(ia) - insertion of second proviso to section 40(a)(ia) - Held that:- In the present case ,it is not disputed that the payees /recipients of the said interest income i.e. M/s Indiabulls Financial Services Ltd. and M/s Bajaj Financial Ltd have included the said income in their return of income and paid taxes on the same. Evidence in the form of Form No.26A as also report of Chartered Accountant was filed. The Revenue has not challenged this fact before us. Thus the assessee had duly demonstrated compliance with the conditions stated in the second proviso to section 40 (a)(ia), which briefly put, states that no disallowance is to be made in cases where the recipient of the income reflects the same in its return of income and pays taxes on the same.
AO also, we find, has in her Remand Report after examining the evidences produced by the assessee, admitted that the said expenses were allowable in view of the provisions of section 40 (a)(ia) r.w.s. 201 (1) of the Act. In such circumstances, since the Assessing Officer has herself admitted that the addition made was unwarranted, the addition no longer survives vis-à-vis assessment order and there is no reason for the Revenue to have any grievance on the issue.
We find that the CIT (Appeals) has rightly followed the proposition laid down by the I.T.A.T. Agra Bench in the case of Rajiv Kumar Aggarwal (2014 (6) TMI 79 - ITAT AGRA) which stated that the second proviso to section 40 (a)(ia) were retrospective in nature w.e.f. 1.4.2005. The said decision has been followed by the Delhi High Court while upholding the above proposition in the case of CIT Vs. Ansal Landmark Township P. Ltd [2015 (9) TMI 79 - DELHI HIGH COURT]. - Decided against revenue.
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2017 (2) TMI 1390
Unexplained expenditure u/s 69C - bogus purchases - Held that:- Books of account was duly audited and payments were made from undisclosed source/disclosed bank account and all the payments are account payee cheque and no region to doubt the purchases. AO was not rejected the books of account. The assessee further filed the letter of confirmation of the supplier copy of bank statement showing the entries of cement and stock reconciliation statement, further the sale and purchase were not doubted by the AO, the substantial amount of sale by the assessee was to the government Department.
Commissioner (Appeals) allowed the appeal of the assessee on the basis of principle of consistency as the similar addition/disallowance was deleted from the assessment of subsequent year. The ld DR could not differentiate as to how the facts for the year under consideration was different for the assessment year 2010-11. Hence, we do not find any ground to interfere in the finding of ld Commissioner (Appeals). - Decided against revenue
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2017 (2) TMI 1389
TPA - comparability analysis - functinal similarity - Held that:- Assessee is engaged in the business of providing advisory services to its associated enterprises noted above to assist them in providing services to the Investment funds. CCIAPL primarily carries out research and scouting activities for ChrysCapital Management Companies to identify entrepreneurs and portfolio companies requiring assistance in the form of capital infusion, strategic direction and financial advice. ChrysCapital Management Companies are asset management companies for investment funds (Private Equity Funds) who generally focus on investment in incubation ventures. These investment funds concentrate on providing funds to entrepreneurs engaged in the business of providing software services, outsourcing services and technology out of India, thus companies functionality dissimilar with that of assessee need to be delsected from final list.
We direct for excluding Brescon Corporate Advisors Limited from the list of comparables.
Deduction under Section 36(1)(ii) in respect of payment of bonus to the two shareholder-directors - Held that:- This issue is covered in favour of assessee by the decision in assessee's own case for the assessment year 2008-09 [2015 (4) TMI 949 - DELHI HIGH COURT] as held the bonuses paid to the two shareholder-directors in the preceding two financial years were in the ratio of 60-65%:40-35%, even though their shareholding was 1:1. The balance sheet of the assessee placed on record also indicates that the two shareholders also hold directorial positions in the assessee. Therefore, the assessee's contention that the bonus was paid to the shareholders in their managerial capacity, like in the case of other managers, cannot be questioned merely on the basis of a speculation by the revenue that such payment was to avoid tax. In such circumstances, the deduction under Section 36(1)(ii) in respect of payment of bonus to the two shareholder-directors is allowed
Allowability of severance cost - Held that:- Admittedly, Sri. Girish Baliga was neither a shareholder nor a director of the assessee company and did not have any other beneficial interest in the assessee. He was a qualified CA and a very experienced person. Therefore, there could not be any other consideration for severance cost of ₹ 35,10,000/- paid to him except the services rendered by him to assessee company. The assessee in its submissions has, inter-alia, pointed out that this payment was based on business exigency keeping in mind the best practices being followed in the industry. Therefore, the payment made to Sri. Girish Baliga by the assessee company as going concern was in line with the practice prevalent in the industry. In order to maintain good reputation as regards employment of Human Resources, it had to meet the common commercial practices. The payment had not been made in contemplation of closing down of unit but in regular course of carrying on assessee's business. Under such circumstances, this payment cannot be held to be in capital field and was an allowable expenditure in the hands of the assessee company. In the result, the appeal of the assessee is partly allowed.
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2017 (2) TMI 1388
TP addition on Import of crystal and crystal components - MAM selection - Held that:- It is noticed that the AO passed the order for the current year by mainly relying on the view taken by him for the A.Y. 2004-05. The ld. CIT(A) has also passed a combined order and there is no separate discussion for the A.Y. 2005-06. The appeal for the A.Y. 2004-05 was argued simultaneously and the submissions made for such earlier year were adopted by both the sides for the instant year as well. We have passed a separate order for the A.Y. 2004-05 in which rejection of the CUP method by the authorities below has been upheld and further direction has been given to the AO/TPO for a fresh determination of the ALP of this transaction, firstly, by considering the application of RPM and if, due to one reason or the other, the same cannot be applied, then, the TNMM.
TP addition on AMP Expenses - Held that:- As relying on SONY ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD. (NOW KNOWN AS SONY INDIA LIMITED) & OTHERS VERSUS COMMISSIONER OF INCOME TAX – III [2015 (3) TMI 580 - DELHI HIGH COURT] we are of the considered opinion that it would be in the fitness of things if the impugned order is set aside and the matter is restored to the file of TPO/AO for a fresh determination of the question as to whether there exists an international transaction of AMP expenses. If the existence of such an international transaction is not proved, the matter would end there and then, calling for no transfer pricing addition. If, on the other hand, the international transaction is found to be existing, then the TPO would determine the ALP of such an international transaction.
Addition in respect of Provision of doubtful debts - AO did not allow deduction for this sum as it was a provision and not an actual write off - Held that:- Amount of provision is not deductible. Actual amount of write off has to be allowed as deduction u/s 36(1)(vii). Reversal of provision should not lead to taxable income. However, deduction allowed in respect of provision for doubtful debts for the A.Y. 2003-04 should be taken into consideration while allowing deduction on actual write off or reversal of provisions to the relevant extent so that no double deduction gets allowed.
Disallowance of advertisement and publicity expenses - Held that:- Following the view taken in our order for the A.Y. 2004-05, we hold that the entire amount of advertisement and publicity expenses should be allowed as deduction in the year of incurring itself. It is however, made clear no further deduction for 2/3rd of the total expenditure for the earlier years be granted as the same will lead to double deduction. If such a deduction has already been allowed, then the same should be reversed to that extent. This ground of the Revenue is not allowed.
Depreciation on computer peripherals at 60% - Held that:- The Hon’ble Delhi High Court in the case of BSES Yamuna Powers Ltd.(2010 (8) TMI 58 - DELHI HIGH COURT), has held that depreciation on computer peripherals should be allowed at 60%. We, therefore, uphold the view taken by the ld. CIT(A) on this issue. This ground is not allowed.
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2017 (2) TMI 1387
Disallowance u/s 40A(3) - payment to Jodhpur Vidyut Vitaran Nigam Ltd. in cash - Difference in opinion - Judicial Member as Third Member appointed - Hon’ble Third Member concurred with the findings of the Hon’ble Accountant Member - Held that:- The nature of business of the assessee is such that assessee is required continuous supply of electricity for which assessee shall have to make payment to Jodhpur Vidyut Vitaran Nigam Ltd. for smooth functioning of the business activity of the assessee. In case no payment is made in cash to the above Nigam, then the electricity would have been discontinued. Therefore, having regard to the nature of business activity of the assessee and that assessee did not have banking facility where payment of electricity bill is to be made and considering the business expediency and other factors, it isof the view the case of the assessee would clearly fall in exception to Rule and no disallowance should be made under section 40A(3) of Income Tax Act.
The learned Accountant Member has, therefore, rightly followed the decision of the coordinate Bench on identical issue in the case of Shri Rahul Pancholi (2015 (10) TMI 2179 - ITAT JAIPUR ) in which on identical facts and issue, the departmental appeal was dismissed. Interestingly, the learned Judicial Member who has dismissed appeal of the assessee on the same set of facts, was the party to the order in the case of Shri Rahul Pancholi (supra). The learned Accountant Member was, therefore, right in his approach in allowing the appeal o the assessee by following the order of the coordinate Bench rather of the same Bench - Decided in favour of assessee
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2017 (2) TMI 1385
Method of computing the exemption u/s 10-A - whether the expenses excluded from the export turnover are also to be excluded from the total turnover for the purpose of Section 10-A - Held that:- As decided in COMMISSIONER OF INCOME TAX v. TATA ELXSI LTD [2011 (8) TMI 782 - KARNATAKA HIGH COURT] there should be uniformity in the ingredients of both the numerator and the denominator of the formula, Section 10-A is a beneficial section. It is intended to provide incentives to promote exports. The components of the export turnover in the numerator and the denominator cannot be different. - Decided against revenue
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2017 (2) TMI 1383
Computing the deduction u/s 10A - Held that:- This issue is covered in favour of the assessee by the judgment of Hon’ble Karnataka High Court rendered in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it was held that Total Turnover is sum total of Export Turnover and Domestic Turnover and therefore, if an amount is reduced from export turnover then total turnover also goes down by the same amount automatically.
Not considering foreign exchange gain / loss as operating income / operating expense while calculating the net cost-plus margins of the Appellant and comparable companies, as per directions issued by the Ld. Panel - Held that:- It cannot be considered if it arises in respect of the turnover of an earlier year because we are concerned with the operating profit of the current year for working out assessee’s margin of profit to compare with the margin of profit of the comparables and since the related turnover is not included in the turnover taken in the denominator, if the Exchange Fluctuation Gain is not excluded from the numerator, it will result in absurd result. We therefore restore this matter to AO/TPO for a fresh decision with the direction that if the related turnover from which the Exchange Fluctuation Gain has arisen is the turnover of the current year then the Exchange Fluctuation Gain should be considered as operating profit of the current year for working out the percentage of profit of the assessee for current year to compare it with rate of profit of the comparables but if it is in respect of the turnover of an earlier year, then such Exchange Fluctuation Gain should be excluded from operating profit of the current year for working out the percentage of profit of the assessee for current year.
Comparable selection - Held that:- Companies functionally dissimilar with that of assessee need to be deselected from final list. Exclusion on account of RPT filter confirmed.
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2017 (2) TMI 1380
Reopening of assessment - reasons to believe - change of opinion - deductions under section 80IA wrongly claimed - Held that:- leave granted - tagged with another appeal.
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2017 (2) TMI 1379
Rejection of books of accounts - disallowance u/s. 40A(2)(b) - addition on account of low Gross Profit - payments for purchase of bullion and gold ornaments from its sister concern - Held that:- The defects pointed by the Assessing Officer are trivial and some are even non-existent. On account of such inconsequential defects the audited books of the assessee cannot be rejected.
Disallowance u/s. 40A(2)(b) - Held that:- the method of averaging price on yearly basis followed by the authorities below is erroneous. The authorities below have failed to take into consideration the instances where the assessee has made payment to its sister concerns at a price less than the market price - there are several instances where the assessee has made payment for purchase of gold jewellery at a price less than the market rate. Under such circumstances, no addition u/s. 40A(2)(b) is warranted.
Decided in favor of assessee.
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2017 (2) TMI 1378
Levy of penalty u/s 271(1)(c) - period of limitation - whether penalty is to be levied in piecemeal as and when the individual issues of an assessment are concluded - The question is, whether in respect to six items also period of limitation would commence from the date Tribunal passed order on 19.02.2001, when it was received by CIT or will commence when, after remand, assessment order is passed by AO in respect to two items and that order attained finality and communicated to CIT.
Held that:- In the present case, if penalty was to be imposed in respect to 6 items which stood final after judgment and order dated 19.02.2001 passed by Tribunal received by CIT(A) on 14.03.2002, the limitation would come to an end after six months, i.e., 30.09.2002. The argument advanced otherwise by learned counsel for appellant (revenue), therefore, cannot be accepted. It is not the question of piecemeal penalty but when penalty is being imposed taking into account quantum of additions upheld or accepted, then statute providing limitation will have to be applied strictly in that respect. Questions-I and II, therefore, are answered against Revenue and in favour of Assessee.
Levy of penalty - concealment of particulars - Held that:- Meaning of word "concealment" is to hide, to keep secret. Free concealment of particulars and income would include false deduction or exemption claimed by Assessee in his Return. The word "conceal" involves and implicit a knowledge on the part of Assessee of his real income when furnished particulars. If an income was already in the knowledge of Department, it cannot be said to be a case of concealment. An erroneous claim and deduction which was withdrawn when error was discovered cannot be said to be concealment of income and penalty cannot be imposed. - No penalty. - Decided against the revenue.
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