Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (5) TMI 797 - ITAT HYDERABADTPA - advancing interest free loans - CUP method adoption to make addition - Held that:- Advancing interest free loans must not necessarily be deemed to be an interest earning activity and an activity to capitalise the opportunity cost for investing in new territories. Since the funds were raised for the purpose of investment in subsidiaries and on the fact that these funds were interest free and ultimately, shares were allotted, we are of the opinion that no adjustment need be made, on the CUP method adopted by the AO/TPO, even if the transaction is considered as one that of international transaction. For all the reasons stated above, we are of the opinion that no adjustment is required in the impugned year. The orders of the DRP are accordingly modified and adjustment made by the TPO stands deleted. Disallowance u/s.10B - Assessee filed return on 31-10- 2008 whereas the due date for filing return was 30-09-2008 - return was uploaded belatedly - The reason given is that the computer got infected and it took some time to set it right so that assessee could upload the entire data - Held that:- The reasoning for delay given is supported by a certificate from a computer specialist, who attended to the problem. Since the audit was completed on 02-09-2008 which was not doubted by the Revenue, there is no reason why assessee should postpone the uploading of the return, when all the information was ready. Therefore, the explanation given that the computers got infected is a reasonable explanation given in the circumstances. We are of the opinion that the delay in filing the return is not an intentional delay but beyond the reasonable control of assessee. Also assessee was also claiming deduction in earlier years and following the principles laid down in the case of Visu International Limited Vs. DCIT [2011 (7) TMI 1161 - ITAT HYDERABAD], the deduction u/s. 10B cannot be denied in the subsequent year without a valid reason. - Decided in favour of assessee. Disallowance u/s 36(1)((v)/(va) - contribution to PF - Held that:- There is no distinction between employee’s and employer’s contribution to PF/ESI, when the total contribution is deposited on or before the due date of furnishing of return of income u/s 139(1) of the IT Act then, no disallowance can be made towards employee’s contribution alone. Accordingly, we agree with assessee’s contentions and therefore set aside the order of AO and DRP on the issue and allow the ground. AO is directed to allow the amounts. Even otherwise, if the amount is not allowed as deduction, the same will be added to the income of the unit thereby deduction u/s. 10B may get allowed, if the disallowed amounts pertain to the unit eligible for deduction. Looking at either way, assessee will be entitled for the deduction. Accordingly, grounds are allowed. Disallowance of 100% depreciation on Pollution control equipment - Held that:- What sort of evidence is required to establish that these are used in controlling the pollution is not specified by the DRP. Assessee categorized certain equipment as pollution control equipment, the nature of the equipment is to be examined in the context of the business operations of assessee. Since this aspect has not correctly appreciated by the AO or DRP, we are of the opinion that this issue requires re-examination by the AO. In case of any disallowance of depreciation, AO is also directed to examine whether such equipment is used and claimed in the unit claiming deduction u/s. 10B and if so, any disallowance thereon would increase the profits of the unit so that assessee may be entitled to higher deduction u/s. 10B. Disallowance of excess depreciation on assets purchased - Held that:- Even though the DRP has mentioned that assessee-company had shares in the said unit, it did not specify whether the shareholding was before the purchase of machinery or after the purchase of machinery, which makes a lot of difference. At the time of transaction, whether they are sister concerns or not is not established on record. Moreover, assessee is objecting to the contention that these are sister concerns. In view of that, we are of the opinion that this issue requires re-examination by the AO. In case of any disallowance on this issue, AO is also directed to examine whether the machines are utilised for the purpose of business of the unit eligible for deduction u/s. 10B and if so, the profits of that unit would increase correspondingly. The deduction u/s. 10B also may have to vary accordingly. With these observations/directions, the grounds on this issue are set aside to the file of AO for fresh examination. Disallowance of depreciation on computers - Held that:- Since the evidence was not furnished before the AO/DRP to establish that assessee has purchased computes and software, it is necessary to examine the transaction of purchase and sale in the hands of those companies, stated to be group concerns by the AO and clear finding should be given whether these transactions of sale of computer software are recorded by those companies and if so, the nature of purchase of computers and software by that company. Therefore, we are of the opinion that this issue also required to be examined by the AO afresh.
|