TMI Blog2015 (12) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... e with respect to selection of comparables by the TPO. No proper decision has been given by the DRP on the merits of the case also. Therefore, in our considered opinion, this ground needs to go back to the file of the DRP to re-adjudicate the same - Decided in favour of assessee for statistical purposes. Rental income from leased properties - AO taxing as as profit and gains of business or profession instead of income from house property - Held that:- As relying upon assessee's own case [2010 (6) TMI 433 - Bombay High Court ] held that Rental income received by the assessee-company from sub-leasing of commercial premises is to be considered as Income from house property even though the renting out of the premises amounts to commercial exploitation for business purposes by the assessee-company - Decided in favour of assessee TDS u/s 194C - disallowance u/s.40(a)(ia) - non deduction of TDS on payments made to manufactures towards purchase of finished goods - Held that:- The purchases have been made by the assessee from manufacturer/suppliers on principal to principal basis. The manufacturers/suppliers had also levied excise duty or sales tax or VAT, as was applicable. As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of this situation by inserting a proviso below section 234C(1)(b).There is no dispute on the fact that the exact estimate could not be done by the assessee on the amount of capital gains. The assessee has relied upon the judgment of Hon’ble Rajasthan High Court in the case of CIT vs. Smt. Premlata Jalani (2003 (7) TMI 62 - RAJASTHAN High Court ), wherein held interest is chargeable on delayed or deferred payment of advance tax, it shall be payable only with effect from the date the liability to pay advance tax in respect thereof has been incurred. There cannot be any interest prior to the date in respect of such liability when there was no liability to pay advance tax under any provisions of the Act. Interest has been levied ignoring the effect of aforesaid proviso as well as judgment therefore in the interest of justice, we send this issue back to the file of the AO to decide the same in terms of our directions as contained above - Decided in favour of assessee for statistical purposes. Interest income granted u/s 244A - Held that:- interest income u/s 244A has been done in such a manner that it has led to double taxation, as on date. We feel that the role of the income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of iGATE Computer System Ltd. (supra), wherein it has been held that once the transaction between the assessee and its AEs was in foreign currency, then the same partakes the nature of international transaction and the said transaction has to be looked upon by applying the commercial principles with regard to an international transaction. If that is so, then the domestic lending rates cannot be applied in order to benchmark the transaction of the assessee with its AEs and the international rates fixed by LIBOR would come into place. As no serious objections have been raised by the Ld. CIT-DR for adoption of international rates fixed by LIBOR, keeping in view the fact that amount was to be received back in US currency only. Thus, we hold that Indian prime lending rates cannot be applied and the international rate fixed by the LIBOR would come into play. In our considered view, as per as per the suggestions received from both the sides, the rate of interest should be LIBOR plus 150 basis points. Period up to which adjustment on account of interest can be made to the income to the current year - Held that:- This issue has been very well explained by the Mumbai Bench of ITAT in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tch of individual transaction statement transactions with insurance companies - Held that:- The primary onus is upon shoulders of the AO to show that the transactions reported in AIR belong to the assessee. It is only thereafter, the onus of the assessee shall start to show that these transactions have been duly recorded in the books of account of the assessee, failing which the addition may be liable to be made. With these directions, this issue is sent back to the file of the AO with further directions to grant adequate opportunity of hearing to the assessee. The assessee shall also extend requisite cooperation to the AO. - Decided in favour of assessee for statistical purposes. Addition on account of some differences on the basis of AIR information and on account of mismatch with From 26 - Held that:- Our prima facie view is that the addition has been made and sustained by the lower authorities by following a casual and irresponsible approach. The assesse has submitted complete information showing proper reconciliation. These have been either ignored or not properly appreciated by the lower authorities. Both of these grounds are sent back to the file of the AO with our direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litator / coordinator between the AE and the third party institutions/ hospitals/ doctors, who actually perform the clinical trials under the instructions of Pfizer Inc. 3.2. The other vital facts are that the assessee company is earning assured return by adding 10% mark-up on the total cost and it has characterized itself as a low risk support service provider. Following comparison has been furnished with respect to assessee s comparables vis-a-vis TPO s comparables: As per TP study Report OP/TC Using March 2007 data As per TPO OP/TC Nature of business Agrima consultants International Ltd. -2.42% 1.39% Engaged in providing business support services and assistance in feasibility study of projects. Cyber media events Ltd. 2.33% 8.73% Engaged in organizing conferences, exhibitions Seminars and specially events. Hind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit margin for provision of support services should be determined in its case by taking into consideration only the cost incurred by it to undertake intermediary functions i.e. own internal costs and that the payments to the investigator should be excluded from the cost while determining profit mark up. I f such pass through costs are excluded, the assessee s margin would be 12% and i f these pass through costs are not excluded its operating profit margin is 7.83%, both of which are higher than the comparable companies whose operating profit margin is 2.28%. Thus, the transaction of the assessee with the AE being at arm s length, no adjustment is warranted. the assessee has also filed a copy of its agreement dated 1.1.97 with its AE in support of its claim that its role with regard to cl inical study management is merely that of a facilitator or an intermediary, performing its agency function. On this basis, the assessee contended that adjustment is not warranted, as unlike those companies, the assessee acts as a risk free support service provider. The assessee also contended that the TPO has not provided the benefit of 5% range as prescribed in the Proviso to Section 92C(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so sent back to the file of the DRP, to be decided along with Ground no.1. 6. Ground No.4: In this ground, the assessee has challenged the action of DRP in confirming the action of AO in taxing an amount of ₹ 5,98,81,000/- being rental income from leased properties, as profit and gains of business or profession, instead of income from house property. 6.1. It has been argued at the outset by Ld. Counsel of the assessee that these issues are covered in favour of the assessee by the judgment of Hon ble Bombay High Court in assessee s own case. Our attention has been drawn by him upon the judgment of Hon ble High Court available at pages No. 7 to 8 of the paper book. This judgment is also reported as CIT vs. Pfizer Ltd 330 ITR 62. In this judgment, Hon ble High Court has affirmed the order of Tribunal holding that the rental income received by the assessee from sub-lease of the commercial prices was to be considered as income from house property . It was argued that the DRP has illegally confirmed the action of AO. On the other hand, Ld CIT DR has relied upon the orders of lower authorities. 6.2. We have gone through facts of the case and orders of lower authorities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the AO, that too without pointing out any distinction in facts or law. The findings and observations given by the DRP in this regard are reproduced herein: We have considered the draft assessment order vis- -vis the submissions and arguments put forth by the assessee in the course of these proceedings. It is found from record that in all the earlier years, the department has consistently taken the view that the impugned income is assessable as income from Business and not Income from House Property as claimed by the assessee. Conforming with the Departmental view on this issue, the Assessing Officer s proposed treatment of the rental income as Income from Business is upheld. 6.5. In our considered view, the judgment of jurisdictional High Court that too in assessee s own case must have been followed, strictly and respectfully. The action of the DRP, disregarding the judgment was contemptuous in nature. Thus, respectfully following the judgment of jurisdictional High Court we decide this issue in favour of the assessee and direct the AO to assess the impugned rental income under the head, income from house property . Therefore, Ground no.4 is allowed. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturers purchase the requisite raw materials, manufacture the products in their premises and deliver the final finished products. As per the agreement, the assessee has a right to visit the manufacturers premises and inspect the process to ensure that the goods are as per the specifications. For the purpose of packing its products, the assessee purchases packaging materials from various suppliers on a principal to principal basis. The packaging material is supplied as per the instructions given in the purchase order. The invoice raised for the supplies is inclusive of the Excise duty and Sales tax as in the case for normal purchase of material. The payments are made to these independent manufacturers/suppliers as per the terms of the agreements. The Manufacturer pays Excise duty and VAT on the goods and the title in the goods is transferred to the appellant at the time of delivery. In view of these features, it was submitted that these transactions were in the nature of purchase/sale of goods and hence not covered under section 194C of the Act. 8.4. It was also submitted by the Ld. Counsel that amendment has been made u/s 194C by Finance Act 2009, whereby, in the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the Explanatory Memorandum to the Finance Bill, 2009, the background of the amendment has been explained as under: There is ongoing litigation as to whether TDS is deductible under section 194C on outsourcing contracts and whether outsourcing constitutes work or not. To bring clarity on this issue, it is proposed to provide that work shall not include manufacturing or supplying product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for sale . This will however not apply to a contract which does not entail manufacture or supply of an article or thing (e.g. a construction contract). It is also proposed to include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, within the definition of work . It is further proposed to provide that in such a case TDS shall be deducted on the invoice excluding the value of material purchased from such customer if such value is mentioned separately in the invoice. Where the material component has not been separately mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. The Department had carried this matter before the High Court. The Hon ble Bombay High Court has upheld the decision of the Tribunal and did not admit the appeal filed by the department. 8.11. Thus, when it has been held that the assessee was not liable for deduction of TDS on this transactions, question of making any disallowance u/s 40(a)(ia) of the Act, does not arise, and therefore, keeping in view the aforesaid discussion, facts and circumstances of the case and the position of law, we find that the disallowance made by the AO is illegal and the same is directed to be deleted, and Ground no.6 is allowed. 9. Ground No.7: It deals with the action of lower authorities in making reference to the DVO for determination of Fair Market Value of Chandigarh property as on 1st April 1981 which was sold by the assessee during the year, and re-computing the capital gains on its sale at ₹ 2,52,31,62,959/- as against an amount of ₹ 206,64,67,043/- as shown by the assessee in the return of income. 9.1. The brief facts are that during the financial year ended 31 March 2007, the assessee had sold the property at Chandigarh for a total consideration of ₹ 2,74,73,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making a reference to the DVO under the said section. 9.5. It was further submitted that a reference to the Valuation Officer under section 55A(b) can be made only in a case where the assessee has not furnished a valuation report. In the instant case, since the value as on 1 April 1981 was taken by the assessee on the basis of the report of a registered valuer, the AO did not have the power to make a reference under section 55A(b) of the Act. Accordingly, the AO s reference to the DVO is invalid even under section 55A(b) of the Act. 9.6. Our attention was also invited to the fact that the amendment made to section 55A by the Finance Act 2012 has been made effective from 1st July, 2012 and was accordingly not applicable to the year under consideration i.e. AY 2007-08. 9.7. Lastly, it was submitted that legal position was well settled on this issue. Our attention was invited to the decision of the jurisdictional High Court in the case of CIT vs Puja Prints, 360 ITR 697 (Bombay). In this decision, Hon ble Bombay High Court has, after considering the said amendment, held that if a report of a registered valuer has been taken by the assessee, then the provisions of section 55A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of Hon ble Jurisdictional High Court on this issue for holding that the reference made by the DVO was illegal and void ab initio. 9.11. We have gone through the facts of the case, arguments made and the judgments placed by both the parties, more particularly judgment of Hon ble Jurisdictional High Court. We have seriously pondered over the contentious issues. The issue before us is whether the AO has requisite powers under the law to make a reference to DVO in case he finds that the value of the impugned property as on 01.04.1981 as shown by the assessee in the return of income is more than the fair market value in the opinion of the AO. As per the Ld. Counsel, the AO does not have any such powers, especially in view of the judgment of Jurisdictional High Court. On the other hand, as per Ld. CIT DR, the AO does have requisite powers under the law irrespective of the fact whether fair market value is expected to be more or less than the value claimed by the assessee in the return of income. 9.12. Before we apply our own analysis on this issue, we find it appropriate to refer to the judgment of Hon ble Jurisdictional High Court in the case of CIT vs. Puja Prints (supra) 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law. This is so as the understanding of the statutory provisions by the revenue as found in Circular issued by the CBDT is not binding upon the assessee and it is open to an assessee to contend to the contrary. The contention of the revenue that the Assessing Officer is entitled to refer the issue of valuation of the property to the Departmental Valuation Officer in exercise of its power under Sections 131, 133(6) and 142(2) of the Act is entirely based upon the decision of the Guwahati High Court in Smt. Amiya Bala Paul (supra). However, the Apex Court in Smt. Amiya Bala Paul (supra) has reversed the decision of the Guwahati High Court and held that if the power to refer any dispute with regard to the valuation of the property was already available under Sections 131(l), 136(6) and 142(2) of the Act, there was no need to specif ically empower the Assessing Off icer to do so in circumstances specified under Section 55A of the Act. It further held that when a specific provision under which the reference can be made to the Departmental Valuation Officer is available, there is no occasion for the Assessing Officer to invoke the general powers of enquiry. 9.13. We have gon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to DVO, if in his opinion the fair market value of the impugned property was more than the value as adopted by the assessee in the return of income on the basis of report of its registered valuer. The facts of the present case are clearly covered with the judgment of Hon ble Jurisdictional High court, and therefore, respectfully following the same we hold that reference made by the DVO was bad in law and is held to be invalid and therefore, consequent to this, all further proceedings made by the AO in pursuance to such reference are also illegal, and therefore, the addition made by the AO on the basis of illegal reference and report of DVO is also illegal, and the same is hereby deleted. As a result Ground No.7 of the assessee s appeal is allowed on primary issue. At this stage, we refrain ourselves from going into the merits of the other arguments with respect to factual infirmities in the report of the DVO, since we have decided this issue on the primary ground itself. 10. Grounds No. 8 and 9 are not pressed and these are dismissed. 11. Ground No.10: In this ground the assessee has challenged the action of Ld. AO in adding a sum of ₹ 26,779/- towards in pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ata Jalani (supra), wherein view has been taken supporting the claim of the assessee in view of the aforesaid proviso.Interest has been levied ignoring the effect of aforesaid proviso as well as judgment of Hon ble Rajasthan High Court, and therefore in the interest of justice, we send this issue back to the file of the AO to decide the same in terms of our directions as contained above. The AO shall decide this issue, and recomputed the amount of interest payable by the assessee, if any, keeping in view position of law as discussed above in juxtaposition of the facts of the case. Thus Ground no 11 is allowed for statistical purposes. 13. Ground No.12 (Additional ground): In this ground the assessee has sought the direction for the Ld. AO to reduce the interest income granted u/s 244A pertaining to A.Y.2003-04, amounting to ₹ 1,18,76,000/-, which was offered by the assessee in the return of income for u/s 2007-08; in view of the fact that it has also been assessed by the AO in assessment year 2005-06 vide order passed u/s 147 r.w.s.143(3) of the Act, thereby amounting to double taxation. 13.1. During the course of hearing, following facts have been narrated by the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year relevant to AY 2005-06. 8. In response to the aforesaid reasons for reopening of the assessment, the appellant vide letter dated 17 July 2012 submitted its objections. 9. In the order dated 11 October 2012 passed under section 143(3) read with section 147 of the Act for AY 2005-06, the AO rejected the submissions of the Appellant and included the entire interest amounting to ₹ 1,87,81,254 in the total income (refer compilation page nos. 133 to 140). 10. On appeal filed before CIT(A) against the aforesaid reassessment order for AY 2005-06, the CIT(A) in its order dated 7 August 2013 has held that the interest amounting to ₹ 1,29,50,156 which was finally determined for AY 2003-04 ought to be taxed in AY 2005-06 as was offered by the Appellant in the return of income filed in pursuance of the notice issued under section 148 of the Act. (refer compilation page nos 252 to 255) 11. Accordingly, the interest income of ₹ 1,18,76,000 which has been taxed in A.Y.2007-08 has also been taxed in A.Y. 2005-06. 13.2. In view of the above facts and circumstances, it has been requested by the Ld. Counsel that, as the interest income for A.Y.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 145 of the Act to the closing stock value. Therefore, in accordance with the department s stand for A.Y.2006-07, the opening stock of A.Y.2007-08 ought to be increased and deduction should be granted to the said extent. In support, the reliance has been placed on the judgment of Hon ble Bombay High Court in the case of CIT vs. Mahalaxmi Glass Works (P) Ltd. 318 ITR 116 and decision of ITAT Mumbai in the case of Hawkins Cookers Limited vs. ITO (ITA No.505/Mum/2004 (14 DTR 206) 14.2. We have gone through the submissions made and cases relied upon by both the sides. This ground being a legal ground is admitted for adjudication. 14.3. The brief facts are that the AO vide its order dated 5th February, 2010, passed under section 143(3) of the Act for the A.Y.2006-07, made an addition under section 145A of the Act to the closing stock amounting to ₹ 8,94,86,220/- on account of unutilized modvat credit. However, the same effect was not given to the opening stock of succeeding year i.e. A.Y.2007-08. 14.4. In our considered view, as the fairness demands and as per law, the value of closing stock of a particular year should be the opening stock of the next year. There can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of 1/5th of the total expenditure u/s 35DD as has already been allowed to the assessee in A.Y. 2004-05. We direct the AO to maintain consistency, and follow the order for A.Y. 2004-05. Thus, Ground no.15 is allowed. ITA No.583/Mum/2013 for A.Y. 2008-09: 17. Ground No.1: Ground no.1 is not pressed by the assessee, and therefore, the same is dismissed. 18. Ground no.2: In this ground the assessee has challenged the action of Ld. AO in proposing an adjustment to Arms Length Price on account of interest on outstanding receivable for ₹ 5,62,836/-. 18.1. The brief facts are that the TPO made adjustment to the Arm s Length Price relating to the interest outstanding receivable and quantified the same @ of 16% per annum. The assessee contested this matter before the DRP, who upheld the adjustment in principle, but reduced the rate of Prime Lending Rate (PLR) of India at rate of 13.25% of per annum. 18.2 Being aggrieved the assessee has contested this matter before the Tribunal. Before us Ld. Counsel has made detailed submissions. 18.3. It was submitted that the TPO erred in calculating delay in payment up till the date of realization of payment which falls i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s objections have been raised by the Ld. CIT-DR for adoption of international rates fixed by LIBOR, keeping in view the fact that amount was to be received back in US currency only. Thus, keeping in view the peculiar facts and circumstances of the case and law as explained by Hon ble Pune Bench in the case of iGATE Computer System Ltd.(supra), we hold that Indian prime lending rates cannot be applied and the international rate fixed by the LIBOR would come into play. In our considered view, as per as per the suggestions received from both the sides, the rate of interest should be LIBOR plus 150 basis points. 18.8. The next issue is to be decided is about the period, up to which adjustment on account of interest can be made to the income to the current year. 18.9. In this regard we find that this issue has been very well explained by the Mumbai Bench of ITAT in case of Tecnimont ICB House (supra), wherein it has been held that interest should be charged only up till the end of the F.Y. Thus, it is held that interest should be calculated from the due date till the date of realisation, if the outstanding amount has been received during the year. In case the outstanding amount ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, disregarding the contentions of the assessee, held that deduction of tax on clinical trial expenses has already been upheld by the CIT(A)-14 vide his order dated 31 December 2009 and hence, the said amount of ₹ 3,56,15,341 was to be disallowed under the provisions of section 40(a)(ia) of the Act. On reference to the DRP, the DRP ignored assessee s contentions and held that purchase of materials, expenses on food and travelling, payment of regulatory fees were not reimbursement of expenses but first hand business expenditure on which tax was deductible at source. The DRP further held that the assessee had not furnished details for the amount of ₹ 3,56,15,341. The assessee filed an application for rectification before the DRP. The DRP vide order dated 31 December 2012 rejected the same on the ground that the same are not rectifiable issues. Aggrieved by the same, the assessee company is in appeal before the Tribunal. 21.2. Before us, Ld. Counsel of the assessee has submitted as under: The appellant respectfully submits that the DRP has erred in upholding the action of the AO and in validating the justification of the AO that the CIT(A) - TDS in its order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31st December 2014. We, therefore, send this ground back to the file of the AO to examine these facts that out of total disallowance of ₹ 3.56 crores, how much amount has been deleted by the AO in the order dated 31.12.2014. The disallowance shall be deleted equivalent to this amount and balance amount of disallowance shall be sustained. Thus, assessee gets part relief, and this ground is treated as allowed for statistical purposes. 22. Ground No.6: The assessee has challenged the action of Ld. AO in treating the profit on sale of right to use the trademark/license pertaining to consumer health brands treated as short term capital gains instead of long term capital gains. It has been further contended in this ground that the AO erred in applying the provisions of section 50 of the Act. 22.2. The brief facts are that during the year under consideration, the assessee had transferred its right to use the trademark/ license pertaining to consumer health brands (i.e., Listerine, Benadryl, Caladryl and Benylin) for a consideration of ₹ 2,10,60,10,000. The long term capital gain on account of the transfer of intellectual property rights was computed at ₹ 2,10,60, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emarks/ licenses got transferred to the appellant with effect from 1st December 2001 By virtue of the above facts, it is evident that the aforesaid licenses were used by the appellant for more than 3 years prior to the date of sale. The order of the AO upheld by the DRP suffers from error in as much as the fact that the said assets were neither capitalized in the accounts nor included under the block of Intangible Assets . Attention is invited to section 2(42A) of the Act which defines Short term capital asset as a capital asset held by an assessee for not more than thirty-six months immediately preceding the date of transfer. In the instant case, the right to use the trademark/license pertaining to consumer health brands was held by the appellant for more than thirty-six months. Accordingly, the said right to use the trademark/ license pertaining to consumer health brands do not fall within the definition of a short term capital asset and accordingly the gain arising on the transfer of the said asset cannot be termed as a short term capital gain. The appellant submits that the rights to use the trademarks/ licenses were acquired by the appellant from Parke Davis In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort term capital gains. 22.9. On the other hand, Ld. DR has relied upon the orders of lower authorities. He has submitted that no value was recorded by the assessee in its books of accounts, and that assessee showed nil value at the time of sale, whereas it had a value at the time when Parke Davis was required it was further submitted that on this amount now depreciation is allowable as per law and since these are depreciable asset, these would be covered u/s.50, talks of depreciable assets. It was lastly argued that by view of dealing fiction the impugned assets would be short term capital asset, therefore, the action of lower authorities in treating capital gain arising from sale of these assets as rightly been treated as short term capital gains. 22.10. We have gone through the submissions of both the sides and material placed before us for our consideration and also gone through the applicable position of law and judgment relied by the parties. In our considered view the action of the Ld. AO in treating the impugned asset as short term capital asset is not sustainable, on law and facts, for following reasons: 22.11. First of all it is noted on facts, which remains und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew is supported by the judgments of Hon ble Punjab Haryana High Court in the case of CIT vs. Santosh Structural Alloys Ltd. (supra), wherein it was held that if no depreciation was ever claimed and allowed on the assets then the same cannot be covered u/s 50, merely on the ground that the said assets were depreciable asset. Similar view has been taken by Hon ble Bombay Bench in the case of Divine Construction Company vs. Assistant Commissioner of Income Tax (138 ITD 72), holding that in order to treat capital gain arising from the transfer of capital assets in the circumstances mentioned in section 50, it is necessary that the conditions in the opening lines of section 50 be fulfilled. It was further held that it is only on the fulfillment of these conditions that the provisions of section 50 get activated. In the present case it has already been held that on facts, both the mandatory conditions are found to be missing. Thus, action of lower authorities is contrary to law and facts. 22.14. Further, for the purpose of addressing the other arguments raised by the lower authorities to deny the benefit to the assessee company, we have examined this issue from another angle also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of these facts and circumstances of the case, it is held that the capital gain arising on the transfer of these assets is long term capital gain. Thus, the AO is directed to recompute the income of the assessee. Accordingly, Ground no. 6 is allowed. 23. Ground No.7: In this ground the assessee has challenged the addition made by the AO on account of mismatch of individual transaction statement transactions with insurance companies, amounting to ₹ 84,72,985/- . 23.1. The brief facts in this case are that during the course of the assessment proceedings the AO had handed over to the assessee an AIR statement and asked the assessee to reconcile the transactions with the insurance companies as appearing in the said statement with its books of account. The assessee requested the AO to provide a further breakup of the amount involved since the name of the parties did not appear in the statement. However, as further information was not available within the system, the AO held the amount remained un-reconciled and proposed an addition for the same. The assessee had submitted before the AO an affidavit affirming that all transactions pertaining to payments to insurance com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is noted that this information has been compiled in a very casual and generalized manner. Assesseee contended that transactions with the insurance company are much more than what is reported in the AIR statement, and all these transactions are duly recorded in the books of accounts, and summary of the transactions was given by the assessee showing that total transactions were to the tune of ₹ 1,86,40,758/-, whereas amount included in these statements is amounting to ₹ 84 lakhs only, and that nothing has been paid outside the books of accounts, and in any case no such evidence has been provided by the Revenue, and therefore, the addition made by the AO was without any basis and rationality. In our considered view, the action of Ld. AO in making the addition in this manner was highly unfair and unjustified. When the assessee had provided complete details, then onus shifted upon the AO to show that what payments have been made by the assessee over and above what has been reflected by it in the books of accounts. The AIR statement does not even contain names of the parties. Under these circumstances, we find it appropriate to send this issue back to the file of the AO with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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