Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (1) TMI 404 - ITAT MUMBAITP adjustment on account of brokerage commission - As submitted that for benchmarking the transactions by application of CUP, an adjustment of 40% has been granted by the coordinate bench of the Tribunal in assessee’s own case for the preceding year - HELD THAT:- As respectfully following the order passed by the coordinate bench of the Tribunal in the assessee’s own case [2022 (7) TMI 1210 - ITAT MUMBAI] we direct the AO/TPO to grant adjustment to the extent of 40% to the assessee while determining the arm’s length price of international transaction of brokerage and commission. As a result, ground No. 1.3 raised in assessee’s appeal is partly allowed. TP adjustment on account of payment of overseas support fee - HELD THAT:- Since the assessee is a stockbroker and its primary activity consists of institutional equities sales, therefore, it needs people who have relationships with the FIIs and can influence investments through the assessee thereby generating revenues for the assessee. The assessee has its head office outside India and the decision, on the basis of which the assessee gets its business viz. the decision to buy and sell securities on the Indian market are made by the head office situated outside India. The overseas sales and trading support fees are fees paid directly for such services which generate revenues for the assessee. Since this issue is recurring in nature and has been decided in favour of the assessee in preceding assessment years, therefore, respectfully following the judicial precedents in assessee’s own case the AO/TPO is directed to delete the transfer pricing adjustment on account of the overseas support service fee. As a result, ground No. 2 raised in assessee’s appeal is allowed. Disallowance of depreciation on BSE/NSE membership cards - HELD THAT:- In the present case, the assessee claimed depreciation on BSE and NSE membership cards on the basis that the same grant licence to the assessee to carry on broking business on the BSE and NSE, respectively, and thus the said membership is in the nature of ‘licence‟ eligible for depreciation under section 32 of the Act. On a without prejudice basis, the assessee also submitted that they are clearly business commercial rights eligible for depreciation @25%. We find that in Techno Shares and Stocks Ltd [2010 (9) TMI 6 - SUPREME COURT] held that a non-defaulting continuing member of BSE is entitled to depreciation on BSE membership card, as the said right of membership is a licence or akin to licence in terms of section 32(1)(ii) of the Act. In the present case, the claim of the assessee was denied by placing reliance upon the decision of the Hon’ble jurisdictional High Court, which decision has now been set aside by the Hon’ble Supreme Court. Therefore we direct the AO to allow the depreciation on BSE and NSE membership cards to the assessee. As a result, ground No. 3 raised in assessee’s appeal is allowed. Disallowance of depreciation on other intangible assets - HELD THAT:- We find no basis in upholding the disallowance of depreciation as claimed by the assessee on other intangible assets, which has been allowed to the assessee since the year of acquisition i.e. assessment year 2000–01, particularly in absence of any change in facts and law. Reliance in this regard is also placed on the decision of the Hon’ble Supreme Court in Radhaswami Satsang [1991 (11) TMI 2 - SUPREME COURT]. Hence, we direct the AO to grant the depreciation on other intangible assets under section 32 of the Act. Accordingly, ground No. 4 raised in assessee’s appeal is allowed. Disallowance u/s 40A(2) in respect of payment made to Mr Ashith Kampani - HELD THAT:- We find that this issue is recurring in nature and has been decided in favour of the assessee in the preceding assessment years. We find that the coordinate bench of the Tribunal in assessee’s own case [2022 (7) TMI 1210 - ITAT MUMBAI] we direct the AO to delete the disallowance made under section 40A(2) of the Act in respect of payment made to Mr Ashith Kampani. Accordingly, ground No. 5 raised in assessee’s appeal is allowed. Disallowance u/s 14A - HELD THAT:- We find that in CIT vs Essar Teleholdings Ltd. [2018 (2) TMI 115 - SUPREME COURT] held that Rule 8D is prospective in operation and cannot be applied to any assessment year prior to the assessment year 2008-09. Thus, respectfully following the aforesaid decision, we are of the considered view that the AO has erred in applying Rule 8D of the Rules in the present case for the determination of disallowance under section 14A of the Act, as the said Rule does not apply to this year. Further, we find that in the preceding assessment years disallowance to an extent of Rs 1 lakh under section 14A of the Act has been upheld in assessee’s own case - we direct the AO to restrict the disallowance under section 14A of the Act to an extent of Rs 1 lakh. Accordingly, ground No. 6 raised in assessee’s appeal is partly allowed. Disallowance on account of transaction charges and lease line charges u/s 40(a)(ia) - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case for the assessment year 2005–06 following the decision of Hon’ble Supreme Court in CIT vs Kotak Securities Ltd [2016 (3) TMI 1026 - SUPREME COURT] held that these charges are merely the recovery of the cost of infrastructure support and therefore, neither it falls under section 194J or section 194C - we direct the AO to delete the disallowance made under section 40(a)(ia) of the Act in respect of transaction charges and lease line charges. As a result, ground No. 7 raised in assessee’s appeal is allowed. Disallowance on account of lease rental paid for the use of vehicles - claim of the assessee was denied by the Revenue on the basis that assessee’s treatment of assets and liability in its accounts was as per the law and the principal amount for acquiring financial lease asset is a capital expenditure - HELD THAT:- Revenue has not brought anything on record to prove that the assessee is the owner of the leased assets. It is trite that entries in the books of account alone are not conclusive in determining the income of the assessee. Further, the Revenue has also not denied that such assets were acquired by way of lease and the same were not purchased by the assessee. Thus, we are of the considered view that the lease rental paid by the assessee is in Revenue nature. Before concluding it is also relevant to note that in the immediately preceding year the assessee has claimed lease rental paid in respect of the vehicles, which was allowed by the AO vide order dated 29/12/2008 passed under section 143(3) of the Act. Thus in absence of any change in facts and law, we find no merit in upholding the disallowance made by the AO on this issue. Accordingly, we direct the AO to delete the disallowance on account of the lease rental paid for the use of vehicles. As a result, ground No. 8 raised in assessee’s appeal is allowed.
|