Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 1418 - AT - Income TaxDisallowance of expenditure incurred in relation to exempt income - Held that:- there is no merit in the arguments of the assessee that it has not incurred any expenditure in relation to exempt income, when the assessee has not maintained separate books of account for investment activity and its business transactions. We further observe that when common expenditure are incurred towards business as well as investment activity, then possibility of certain expenditure attributable to investment services cannot be ruled out. Therefore, keeping in view of the provisions of section 14A r.w.r. 8D(2), we are of the considered view that 5% of exempt income towards expenditure would meet the ends of justice. - Decided against the assessee. TDs liability - disallowance of expenses u/s 40(a)(ia) towards liaisoningcharges @25% of such expenses. - any payment made to a non resident for rendering services in India would come within the provisions of section 195 of the Income-tax Act, 1961. In this case, the payment has been made outside India for rendering services outside India. Therefore, the question of withholding taxes on such payment does not arise, consequently, the question of disallowance of such expenditure u/s 40(a)(ia) also does not arise. - Entire additions directed to be deleted - Decided in favor of assessee. Estimation of income on advance receipts - principle laid down in AS-11 to recognize revenue - Held that:- Once the assessee is following a method of accounting which is in accordance with the method prescribed by ICAI for recognition of revenue from the kind of projects the assessee is undertaking and such method has been accepted by the department in the earlier year, there is no reason for the AO to deviate from the method followed by the assessee without any change in facts and circumstances. In this case, the AO has made addition towards income from the project on advances received without recording any reasons as to how advance received by the assessee forms part of revenue for the current year. - No additions - Decided against the revenue.
|