The ITAT held that the common expenditure of the head office ...

ITAT Clarifies Expense Allocation Rules for Profit Calculation; Payments to ESG International Not Taxable in India.

December 4, 2024

Case Laws Income Tax AT

The ITAT held that the common expenditure of the head office needs to be allocated on a reasonable and scientific basis to the eligible unit for correctly determining its profit. The ITAT upheld the allocation of expenses like commission to directors, audit fees, and bank charges to the MEPZ units. Regarding goods transferred to the MEPZ unit, the issue was remitted back to the Assessing Officer to ascertain the fair market value. The disallowance of prior period expenses was upheld due to lack of substantiation. The payment made to ESG International, USA for warehouse services was held not taxable in India as it did not constitute fees for technical services under the India-USA tax treaty. The "make available" condition was not fulfilled. The disallowances of foreign travel expenditure of directors and irrecoverable taxes were deleted. The additions for travel, gifts, and garden expenses were also directed to be deleted. The penalty imposed for the ESG International payment was cancelled as the primary addition was deleted.

View Source

← Previous Next →

The ITAT held that the common expenditure of the head office ...

ITAT Clarifies Expense Allocation Rules for Profit Calculation; Payments to ESG International Not Taxable in India.

December 4, 2024

Case Laws Income Tax AT

You may also like:

The ITAT ruled that Portfolio Management Service (PMS) fees paid by the appellant to portfolio managers qualify as expenses "wholly and exclusively incurred in...

The ITAT ruled that the assessee is entitled to set off brought forward losses from AYs 2012-13 and 2013-14 against profits earned in AY 2017-18. The Tribunal clarified...

Profit estimation on unaccounted turnover: AO estimated 8% profit based on seized material, which was reduced to 5% by CIT(A). ITAT held that in case of profit...

ITAT ruled AMP expenses did not constitute international transaction under Section 92B, as Revenue failed to establish existence of arrangement between assessee and AE...

The ITAT ruled that receipts from Business Support Services (BSS) should be deleted from the assessee's taxable income, following binding precedent established in the...

In a LTCG computation case, the ITAT allowed the assessee's appeal regarding disallowance of improvement costs on a property transfer. The tribunal held that payments...

Deduction u/s 80IC - AO reallocated management fees and remuneration paid to managing director on gross profit basis. ITAT held allocation basis accepted by AO in past...

ITAT reversed penalty imposed under s271I for non-submission of Form 15CA/15CB regarding overseas transactions. Following precedent in M/s Vinay Diamond matter, tribunal...

The ITAT addressed various issues including disallowance u/s 14A r.w.r.8D, where Revenue challenged deletion of disallowance made by AO. ITAT upheld CIT(A)'s decision,...

Income Tax: Section 44 of the Income Tax Act provides for computing profits and gains of life insurance business based on the First Schedule. Rule 2 of the First...

Disallowance of deduction claimed u/s 24(b) was rejected as the assessee was incurring interest expenditure for redevelopment of the house, and the CIT(A) rightly...

In cases of spectrum allocation where the telecom operator opts for deferred payment instalments as per the Frequency Assignment Letter (FAL) issued by Department of...

ITAT upheld deletion of interest expense disallowance where assessee provided interest-free advances while having interest-bearing loans. The advances were given with...

The ITAT ruled against treating notional costs of services provided by the associated enterprise as part of operating expenses when calculating the assessee's PLI. The...

The ITAT considered the issue of set off of carried forward losses against current year profit due to a change in shareholding. Section 79 application was disputed, with...

Quick Updates: