Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

M/s. Agilisys IT Services India Pvt. Ltd. Versus ITO-9 (2) (3) , Mumbai and DCIT-9 (1) , Mumbai Versus M/s. Agilisys IT Services India Pvt. Ltd.

Addition on account of notional interest chargeable on the outstanding debtors (associated enterprises) balances - Held that:- Without going into the controversy as to whether the overdue receivables from associated enterprises constitute an ‘international transaction’ within the meaning of Sec. 92B of the Act or not, the assessee deserves to succeed on its alternate plea. The aforesaid discussion clearly shows that after factoring in the notional interest calculated with respect to the overdue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hold that the addition of ₹ 15,82,891/- on account of notional interest chargeable on the outstanding debtors (associated enterprises) balances is not tenable and is directed to be deleted - ITA No. 1145/Mum/2014 and ITA No. 1136/Mum/2014 - Dated:- 31-10-2016 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER. Assessee by : Shri Ronak Doshi Revenue by : Shri N.K. Chand and Shri Mohammed Rizwan ORDER PER G.S. PANNU, AM : These are cross-appeals filed by the assess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1. On the facts and in circumstances of the case and in law, the ld. CIT(A) erred in confirming the action of Income-tax officer - 9(2)(3) * the AO"+ by treating the outstanding debtors balance as at the year end as an international transaction u/s 92B and thereby computed arms length price u/s 92C(3) by making addition of notional interest. 2. The ld. CIT(A) failed to appreciate and ought to have held that the continuing debit balance with Associated Enterprises ( AE ) does not constitute .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re than comparables and hence, no further addition is called for u/s 92C(3) of the Act. 5. The Appellant humbly prays that the order of the ld. CIT(A) be set aside and the adjustment on account of arm s length price adjustment be deleted. ITA No. 1136/Mum/2014 (Revenue s appeal) 1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was right in directing the assessing officer to workout interest in respect of Arm s Length Adjustment as per Reserve Bank of India .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ises from an addition of ₹ 15,82,891/- made by the Assessing Officer on account of notional interest on the outstanding debit balances with associated enterprises by treating the same as an international transaction in terms of Sec. 92B of the Act. In other words, grievance of the assessee is that income-tax authorities have erred in treating the outstanding debtor balances as at the end of year as an international transaction u/s 92B of the Act and thereby computing arm s length price adj .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

23,157/- and it offered tax on book profit of ₹ 1,49,18,266/- u/s 115JB of the Act since tax computed u/s 115JB of the Act was more than the tax computed under the normal provisions of the Act. Be that as it may, for the present purpose, we are concerned with an addition of ₹ 15,82,891/- made by the Assessing Officer on account of notional interest on continuing debit balances of the associated enterprises. The facts relevant for the said controversy are as follows. Assessee is rende .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssee had determined its entity level margin of 9.19% and after benchmarking it with the average margin of the comparables selected, the margins of assessee were found to be favourable and thus, assessee pointed out that the stated value of its international transaction of Provision of software development services to the associated enterprises was at an arm s length price. Notably, the average margin of the comparable concerns was computed at 3.53%. The aforesaid position canvassed by the assess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ficer computed an addition of ₹ 15,82,891/- being interest chargeable on the continuing debit balances of the associated enterprises, calculated @ 7%, which was the short term deposit rate of State Bank of India. The aforesaid dispute was carried in appeal by the assessee before CIT(A) by making varied submissions. Firstly, the plea was that continuing debit balances with associated enterprises does not constitute international transaction within the meaning of Sec. 92B of the Act and ther .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

om the value of sales effected, the basic transaction of providing software development services to the associated enterprises remain at arm s length price and hence no addition was warranted separately on this count. The CIT(A) has disagreed with the assessee in principle, but has scaled down the addition. As per the CIT(A), the quantum of addition worked out by the Assessing Officer by applying 7% rate of interest, being the short term deposit rate of State Bank of India, was wrong and instead .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sue, they are being taken up together. 5. Insofar as appeal of Revenue is concerned, the grievance is against action of CIT(A) in holding that the arm s length rate of interest on the continuing debtor balances of associated enterprises be calculated by applying LIBOR + 200 basis points. The stand of Revenue on the other hand is that such interest be calculated by applying 7% rate of interest which is the short term deposit rate of State Bank of India. On this aspect, in our view, the decision o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is in the appeal of assessee whereby it is canvassed that the impugned transaction reflected by the outstanding debit balances of the associated enterprises cannot be construed as an international transaction within the meaning of Sec. 92B of the Act. It has also been agitated in the appeal of assessee that there was no practice of charging interest on overdue payments from non-associated enterprises and, therefore, no adjustment is liable to be made on account of notional interest on outstandin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d representative also brought out that in Assessment Year 2008-09 the Tribunal vide ITA No. 7755/Mum/2012 dated 8.10.2014 has deleted a similar addition on the ground that where there is a uniform policy of not charging interest to both associated enterprises and non-associated enterprises, no adjustment on account of notional interest on outstanding receivables of the associated enterprises is required to be made. 8. At the time of hearing, the learned representative for the assessee also furni .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es be adjusted/reduced from the assessee s margin of 9.19% and the resultant margin would also be favourable in comparison to the average margin of the comparables selected. It has been explained that assessee has given credit period of 45 days to its associated enterprises and with respect to the payments received beyond the credit period, the Assessing Officer had made the adjustment on account of notional interest. The assessee-company has given a working whereby it has adjusted its operating .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aid to be at arm s length and no separate adjustment is required to be made on this count. We find that such a plea of assessee was very much before the Assessing Officer also, as is evident from a copy of communication dated 21.12.2011 addressed to the Assessing Officer, a copy whereof is placed at pages 43 to 46 of the Paper Book. At pages 47 to 49 of Paper Book, the working of notional interest on delayed payment from associated enterprises and also the working of operating profit to operatin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

News: Notification Issued For GST Actionable Claim On Branded Food Products

News: GST Refund - Blockage of Working Capital of Exporters - earlier also there was a normal blockage of funds for a period of 5-6 months at least

News: Clarification about Transition Credit - ₹ 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on 30th June, 2017 - claim of credit of ₹ 65,000 crore is not unexpected

Article: 20 Things You must know about E Way Bills in GST Law

Article: MISTAKES IN DRAFTING

Forum: Duty Drawback- Urgent

Highlight: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg. - Circular

Highlight: The definition of "subsidiary company" or "subsidiary" u/s 2(87) of the Companies Act, 2013 shall come into force w.e.f. 20-9-2017

Highlight: Central Government notified the All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017 - Notification

Notification: All Industry Rates of Duty Drawback Schedule w.e.f. 1.10.2017

Circular: Investment by Foreign Portfolio Investors in Corporate Debt Securities – Review

Notification: Exemptions on supply of services under UTGST Act

Notification: Rates for supply of services under UTGST Act

Notification: Exemptions on supply of services under IGST Act

Notification: Rates for supply of services under IGST Act

Notification: List of Exempted supply of services under the CGST Act

Notification: Rates for supply of services under CGST Act

Highlight: Acceptance of deposits by companies from its members - conditions relaxed in case of Specified IFSC Public company and a private company - Rule 3 amended

Notification: Rate of exchange of conversion of the foreign currency with effect from 8th September, 2017

News: Tax Payers Advised To Confirm Identities Of Income Tax Search Authorities

Notification: Amendment in Appendix 3 (SCOMET items) to Schedule- 2 of ITC (HS) Classification of Export and Import Items 2012

Forum: GST Invoice

Notification: The Customs and Central Excise Duties Drawback Rules, 2017

Circular: The Customs and Central Excise Duties Drawback Rules, 2017 and All Industry Rates (AIRs) of Drawback related changes -reg.

News: GST implementation smoother than expected: Jaitley

Forum: GST - TRAN1 - filed - Data uploaded with Remarks Processed with Error - Not coming in Electronic credit ledger - need suggession guidance

Forum: 3B mistake

Forum: Input tax credit

Forum: Excise duty credit on finished stock at additional place of business.

Forum: Due date of Filing TRAN-1

Highlight: Diversion of income at source - Joint venture agreement - 97% of the receipt transfer to M/s TRG Industries (P) Ltd. - scope of the agreement - it is diversion by overriding title - not taxable in the hands of assessee - HC

Highlight: Expenditure on eligible projects or schemes u/s 35AC - After 01.04.2017 the legislature desired to withdraw such deduction. - The Union legislature was competent to introduce such amendment - HC

Highlight: Transfer of trading assets at cost price, the profit component also stood transferred to the outgoing Directors, which otherwise belonged to the Company - the fact that AO has made the addition in the hands of the Directors would not make any difference - additions confirmed - HC

Highlight: The interest u/s 234B of the Act cannot go beyond the stage of S.245D(I) before the Settlement Commission - HC

Highlight: Galvanized iron pipe is a different commercial commodity than a iron pipe, therefore the activity of galvanization in our considered opinion amounts to manufacture - Deduction u/s 80-IB allowed - HC

Highlight: Penalty u/s 271C - non deduction of TDS on interest paid to sister concerns in terms of Section 194A - Levy of penalty confirmed - HC

Highlight: Disallowance of interest - reference to section 179 - The legislature has also recognised, that the doctrine of lifting of veil in the matter of tax dues is to be applied to prevent fraud etc. and not where the company has suffered despite its normal bona fide function. - HC

News: RBI Reference Rate for US $

Notification: Amendment in Notification No. S.O. 3118(E), dated the 3rd October, 2016

Highlight: Discount on ESOP to be allowed as business expenditure u/s 37(1), during the years of vesting on the basis of percentage of vesting during such period, subject to upward or downward adjustment at the time of exercise of option.

Notification: Central Government appoints the 20th September, 2017 as the date on which proviso to clause (87) of section 2 of the Companies Act 2013, shall come into force

Notification: Companies (Restriction on number of layers) Rules, 2017

Highlight: Penalty u/s 271(1)(c) - additional income disclosure - surrender of income post survey u/s 133A - he disclosure made by the assessee is voluntary in nature, in the revised return - no penalty

Highlight: Reopening of assessment - notice u/s 148 issued on the directions of JCIT / CIT - a perusal of reasons for initiating reassessment proceedings clearly show that they are against the sprit of provisions u/s 147

Highlight: MAT - Adjustment to book profit - computation u/clause (f) of Explanation-1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A r.w.Rule 8D of I.T. Rules.

Highlight: Addition on account of alleged suppression of service value received - the addition made simply believing the Form 26AS will be an arbitrary exercise of power which cannot be sustained

Notification: Exempts intra state supply of heavy water and nuclear fuels from DAE to NPCIL

Notification: Seeks to amend notification No. 12/2017-UTT(R) to exempt right to admission to the events organised under FIFA U-17 World Cup 2017

Notification: Seeks to amend notification No. 11/2017- UTT(R) to reduce CGST rate on specified supplies of Works Contract Services

Highlight: Liability to pay duty on import of software - Though no authorization was given by the appellant to DHL, it is an undisputed position that the software has, in fact, been ordered by the appellant and have been delivered to them by DHL - the appellant is to be considered as the importer



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version