9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1940 - AT - Income TaxTP Adjustment - arm s length price of the technical service - CIT (A) restricting disallowance of technical services to 50% of amount claimed by the appellant - HELD THAT - The issue in question is covered against the Revenue by virtue of the order passed by the Bangalore Bench of the tribunal in the case of M/s.Gemplus India Pvt. Ltd. Vs. ACIT 2010 (10) TMI 184 - ITAT BANGALORE for assessment year 2003-2004. In the light of this order dated 21.10.2010 the learned Departmental Representative was fair enough to accept that the decision taken by the learned CIT(A) accords with the view taken by the Bangalore Bench of the Tribunal in the afore-noted case. In such circumstances we are left with no choice but to uphold the impugned order on this issue and to this extent. No infirmity in the order of ld. CIT(A). Accordingly we uphold the same. Additions u/s 115JB - CIT(A) treating unascertained liability confirming the addition to the book profit computed the income under Section 115JB of the Act - HELD THAT - We find that the assessee has made provision for outstanding liabilities of revenue nature in its accounts. The estimated provisions were reversed in subsequent year. This has been the consistent practice of the assessee. The amounts debited were based upon past pattern of expenditure. However since TDS had not been deducted by the assessee as individual parties were not identified the sums were disallowed in normal computation by the assessee. The A.O. had made the disallowance under section 115JB on the ground that these were ascertained liability and TDS were not deducted. We note that the provision was made under normal accounting system as per past practice. The accounts were duly certified by the auditors. In such scenario ratio of Hon ble Apex Court decision in the case of Bharat Earth Movers Limited vs. CIT 2000 (8) TMI 4 - SUPREME COURT supports the case of the assessee. We are of the considered opinion that the authorities below have erred in adding back the impugned amounts u/s. 115JB. Hence we direct for these deletion. Provision for disputed claim - amount in question was a provision for the sum towards security charges payable to Jawaharlal Nehru Port Trust as per the concession agreement - HELD THAT - It is settled law that it is the substance that counts and not the nomenclature given to it. In the present case the assessee has received invoices from JNPT toward security charges. These were on account of deployment of CISF Personal. The payment for which was compulsory. The assessee accepted the liability but awaiting supporting documents made the debit in the name of disputed liability. As mentioned above the name given by the parities is not determinative of the character of the transaction but it is the substance that counts. CIT(A) has noted that what was the ultimate fate of the liability has not been submitted before him. Even before us the ld. Counsel of the assessee has not given details of the present position of this liability. In our considered opinion this aspect is crucial for proper adjudication of this issue. Hence we remit this issue to the file of the A.O. to consider the issue afresh after ascertaining the present fate of the liability. Interest income qualify for deduction u/s. 80IA - HELD THAT - Interest on fixed deposits in the bank would be profits and gains derived from any business of an industrial undertaking. The same reasoning would apply to extend deductions under Section 80IA of the Act for the compensation received for non-supply of spare parts. Thus the issue stands concluded in favour of the appellant assessee by the decision of this Court in Jagdishprasad M. Joshi 2008 (11) TMI 326 - BOMBAY HIGH COURT
Issues Involved:
1. Disallowance of technical services fees claimed by the assessee. 2. Addition of unascertained liability under Section 115JB. 3. Addition of disputed claims under Section 115JB. 4. Denial of deduction under Section 80-IA for other income. Detailed Analysis: Issue 1: Disallowance of Technical Services Fees Claimed by the Assessee The Revenue challenged the CIT(A)'s decision to restrict the disallowance of technical services fees to 50% of the amount claimed by the assessee. The assessee had incurred Rs. 3,46,50,000 on technical services provided by its associated enterprise (AE), and the Assessing Officer (AO) made an adjustment of Rs. 2,15,41,247 based on the Transfer Pricing Officer's (TPO) determination of the arm's length price. The CIT(A) followed previous ITAT decisions for assessment years 2003-04 and 2004-05, which were not challenged by the Revenue. The ITAT upheld the CIT(A)'s order, noting that the issue had been consistently decided in favor of the assessee in earlier years. Issue 2: Addition of Unascertained Liability under Section 115JB The assessee contested the addition of Rs. 77,305,970 as unascertained liability to the book profit under Section 115JB. The AO added this amount, arguing that the provision was made on an estimated basis and was reversed in the next financial year, indicating it was not an ascertained liability. The CIT(A) confirmed the AO's action but granted partial relief by directing the AO to allow the deduction of the provision added back in the previous year. The ITAT, referencing the Supreme Court's decision in Bharat Earth Movers Limited vs. CIT and Apollo Tyres Ltd. vs. CIT, ruled that the liability was not contingent and directed the deletion of the addition. Issue 3: Addition of Disputed Claims under Section 115JB The assessee also contested the addition of Rs. 13,560,000 as contingent liability for disputed claims. This amount was a provision for security charges payable to Jawaharlal Nehru Port Trust (JNPT). The AO and CIT(A) considered it contingent since the liability was disputed and not ascertainable. The ITAT noted that the provision was based on past invoices and was a compulsory payment, but remitted the issue back to the AO to ascertain the current status of the liability. Issue 4: Denial of Deduction under Section 80-IA for Other Income The assessee claimed a deduction under Section 80-IA for other income, including rent recovery, sundry revenue, and interest income totaling Rs. 60,536,836. The CIT(A) denied the deduction, stating that the income was not derived from the business of operating and maintaining the container terminal. The ITAT dismissed the claims for rent recovery and sundry revenue as not pressed by the assessee. However, it allowed the deduction for interest income, citing the Bombay High Court's decision in M/s. Tema Exchangers Manufacturers Pvt. Ltd. vs. The Asst. CIT, which held that interest income qualifies for deduction under Section 80-IA. Conclusion: The ITAT upheld the CIT(A)'s decision on the disallowance of technical services fees and allowed the deduction for interest income under Section 80-IA. It directed the deletion of the addition for unascertained liability under Section 115JB and remitted the issue of disputed claims back to the AO for further verification.
|
