2014 (2) TMI 232 - AT - Income Tax

Determination of income Held that - CIT(A) erred in determining the gross receipts of the assessees @ 110% of the expenses, on the impression that the co-ordinate bench of Tribunal has taken an identical view - these assessees filed miscellaneous petitions pointing out that the co-ordinate bench of Tribunal set aside the matter to the file of the assessing officer with the direction to examine the issue - Assessments giving rise to the appeals filed by the Revenue were made based on advance ruling given by the Authority for Advance Ruling constituted under the Income Tax Act holding that respondent s operations in India attract tax under the Income Tax Act - The order of the CIT(A) set aside and the matter remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues:
Determination of income in the hands of the assessees for the assessment years, interpretation of the decision of the Cochin Bench of the ITAT, applicability of the decision of the Hon'ble Delhi High Court, and the impact of the advance ruling on the assessments.

Analysis:
The judgment involves appeals filed by assessees and the Revenue against orders passed by the Ld. CIT(A)-II, Kochi for the assessment years in question. The primary issue is the determination of income in the hands of the assessees related to their Indian operations. The Assessing Officer estimated income at 25% of the total commission income earned through remittances made via Indian offices. The Ld. CIT(A) directed the adoption of 110% of expenses as gross total income based on a decision of the Cochin Bench of the ITAT in a previous assessment year. Both parties appealed the Ld. CIT(A)'s orders, leading to this judgment.

The Co-ordinate bench of the Tribunal had considered a similar issue in the case of UAE Exchange Centre and remitted the matter back to the Assessing Officer to follow the decision of the Hon'ble Delhi High Court in the assessee's own case. The Tribunal upheld the Ld. CIT(A)'s order in determining gross receipts at 110% of expenses based on the impression that the Co-ordinate bench had taken a similar view. However, it was later clarified that the Co-ordinate bench had actually set aside the matter for reexamination in light of the Delhi High Court's decision.

Subsequently, the Tribunal set aside the Ld. CIT(A)'s orders and remitted the matters back to the Assessing Officer to follow the Hon'ble Delhi High Court's decision in the UAE Exchange Centre Ltd case. The Hon'ble jurisdictional High Court did not disturb the Tribunal's findings, leading to the decision to remit the matters back to the Assessing Officer in all cases to adhere to the Delhi High Court's decision.

The judgment highlights the importance of following judicial precedents and decisions of higher courts in determining income tax assessments. It emphasizes the need for consistency and compliance with legal directives, ensuring fair treatment for both taxpayers and the Revenue.