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2019 (2) TMI 1745 - HC - Income TaxDisallowance under Section 14A - HELD THAT - Assessee engages itself in the business of IT enabled services in the medical sector. The AO had brought to tax certain amounts by applying disallowance u/s 14A. This was deleted by the impugned order which noticed that in fact no tax exempted income was earned during the assessment year A.Y.2011-12. Since Cheminvest Ltd. vs. CIT 2015 (9) TMI 238 - DELHI HIGH COURT prevails, no substantial question of law arises on this ground. Interest on receivables, beyond the contractual credit period - HELD THAT - Interest income attributable on delayed receipts beyond contractually agreed period i.e. ninety days. The Tribunal took note of the decisions of this Court in Avenue Asia Advisors Pvt. Ltd. vs. DCIT 2017 (9) TMI 1295 - DELHI HIGH COURT and Kusum Healthcare Pvt. Ltd. vs. ACIT 2017 (9) TMI 1295 - DELHI HIGH COURT and has remitted the matter for factual analysis especially with respect to the question whether the assessee was debt free at the relevant point of time. In these circumstances, no question of law arises. TP Adjustment - Selection of comparable - first comparable excluded by ITAT‟s order i.e. Accentia Technologies Ltd., was excluded on the basis that the company was functionally dissimilar and that the segmental data for the assessment year with regard to the comparable segment was not available. The second comparable directed to be excluded i.e. TCS E-Serve Ltd., was on the ground that the concern provided high end online software solutions unlike the assessee, which provided internet based medical health related services. The real services, therefore, were entirely dissimilar. We are of the opinion that this aspect is not a question of law, rather a factual one and does not call for any interference.
Issues involved:
1. Disallowance under Section 14A 2. Interest income on delayed receipts 3. Transfer pricing adjustment on comparables Analysis: Issue 1: Disallowance under Section 14A The appellant, engaged in IT enabled services in the medical sector, was subjected to a disallowance under Section 14A by the Assessing Officer (AO). However, the impugned order found no tax-exempted income earned during the relevant assessment year. Citing the precedent set by Cheminvest Ltd. vs. CIT (2015) 378 ITR 33, the Court held that no substantial question of law arose on this ground, leading to the dismissal of the appeal. Issue 2: Interest income on delayed receipts The second issue pertained to interest income attributable to delayed receipts beyond the contractually agreed period of ninety days. The Tribunal referred to previous decisions in Avenue Asia Advisors Pvt. Ltd. vs. DCIT (2017) 398 ITR 120 and Kusum Healthcare Pvt. Ltd. vs. ACIT (2015) SCC Online ITAT 4216. The matter was remitted for further factual analysis, particularly concerning whether the appellant was debt-free at the relevant time. As no legal question emerged, the appeal was dismissed on this issue. Issue 3: Transfer pricing adjustment on comparables The final issue addressed transfer pricing adjustments concerning comparables. The ITAT excluded two comparables: Accentia Technologies Ltd. and TCS E-Serve Ltd. Accentia Technologies Ltd. was excluded due to functional dissimilarity and lack of segmental data, while TCS E-Serve Ltd. was deemed dissimilar in services provided compared to the appellant. The Court deemed this issue as factual rather than legal, leading to the dismissal of the appeal as no substantial question of law was found. In conclusion, the Court dismissed the appeal as it found no substantial questions of law arising from the three grounds urged by the Revenue. The judgment provided detailed reasoning for each issue, emphasizing the factual nature of certain aspects and the applicability of established legal precedents.
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