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Income Tax - Case Laws
Showing 361 to 380 of 171110 Records
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2025 (1) TMI 1290
Addition of unpaid VAT liability u/s 43B - HELD THAT:- Admittedly, the issue in present case qua the admissibility of unpaid VAT liability which was not paid on or before the due date for furnishing the return u/s 139 of the Act, if the same is not charged to P&L Account, the same cannot be disallowed being not claimed as deduction in the books of accounts.
We may herein note that on this issue the revenue through its Ld. Standing Counsel had accepted that the said amount was not claimed as an expenditure in P&L Account and the case is covered by the decision rendered in the case of M/s Ganapati Motors [2017 (4) TMI 1613 - CHHATTISGARH HIGH COURT] under such admission by the revenue, the contentions raised before us are found to be bereft of any substance. Decided against revenue.
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2025 (1) TMI 1289
Addition of credit card payments being personal in nature u/s. 37(1) - Addition in hands of the Director as perquisite u/s. 2(24)(iv) - HELD THAT:- As undisputed fact that the company had agreed before the DDIT[Investigation] and disallowed the credit card payments being personal in nature u/s. 37(1) of the Act while filing the return of income of the company for the assessment years under consideration. Once, the company, did not claim the credit card payments being personal in nature as business expenditure while computing the business income, (due to disallowance made by the company), the aforesaid credit card payment relating to personal in nature cannot be taxed again in the hands of the assessee-director as income u/s. 2(24)(iv) of the Act.
AO himself has observed that during post search proceedings, the assessee suo motto submitted before the DDIT [Investigation] and disclosed the details of official expenditure and personal expenses of Directors related to the payment of credit card bills in the hands of the company. Since the company did not claim the personal expenditure while computing the business income, the assessee did not receive any additional benefit from the company.
AO is therefore totally unjustified in making the addition in the hands of the assessee being the personal expenditure of the director paid by the company which was disallowed in the hands of the company and the company paid taxes there on since it amounts to double taxation.
Judgements relied on by the CIT(A) are distinguishable on facts, as in those cases, the company did not disallow the expenses u/s. 37(1) of the Act in the hands of the company. Decided in favour of assessee.
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2025 (1) TMI 1288
Unexplained credits u/s 68 - treatment of sale consideration received on sale of diamonds as unexplained/Bogus LTCG -HELD THAT:- The existence of rough diamonds with the assessee together with the activity of processing of rough diamonds into cut and polished diamonds and sale of those cut and polished diamonds to third party customers is proved beyond reasonable doubt by the assessee herein.
In the present case, the diamonds were gifted to the assessee by his grandfather in the previous year relevant to assessment year 1994-95, while computing capital gains, the period of holding should be construed accordingly. Thus, such diamonds shall fall within the definition of “long term capital assets” and consequently, “long term capital gains” shall arise on their transfer.
CIT-A had relied on CBDT Circulars referred supra to treat the gains arising on sale of diamonds as short term capital gains. In this regard, we find that the Circulars had taken oscillating positions with regard to the period of holding of assets which works contradictory to the existing provisions of the Act itself. Hence the provisions of the Act would prevail.
Explanation 1(i)(b) of Section 2(42A) of the Act clearly lays down the law regarding the period of holding of assets. Hence there is no need to place reliance on Circulars for this purpose. Either way, the Circulars are binding only on the revenue authorities and the same is not binding on the Tribunal.
Period of holding of diamonds need to be reckoned from Assessment Year 1994-95 in terms of provisions of the Act and accordingly the resultant gain on sale of diamonds would have to construed only as Long Term Capital Gains in the facts and circumstances of the instant case.
Gains on sale of cut and polished diamonds is to be construed as LTCG which had already been offered to tax by the assessee in the return of income and the same cannot be treated as unexplained cash credit u/s 68 of the Act in the facts and circumstances of the instant case.Ground Raised by the assessee are allowed.
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2025 (1) TMI 1287
Validity of reassessment u/s 147 - Bogus LTCG on shares - HELD THAT:- Lower authorities brushed aside the submissions and all the documents filed during the course of the respective proceedings and merely relied upon the information received through CRIU module of insight portal and failed to conduct an independent inquiry against the claim of the assessee.
Absolutely, there is no direct or indirect evidence against the assessee which has been brought on record by the lower authorities to justify the addition by denying the claim of exemption under section 10(38) for the assessee.
The lower authorities had merely relied on third party information in this regard. It is pertinent to note that the transaction of purchase of shares made by the assessee in this regard has been accepted and no doubts or adverse inference has been drawn on the same.
These investments in shares were made in September 2012. The payments for the same had been made by account payee cheque out of the disclosed bank account by the assessee. These shares were duly dematerialized and were held by the assessee for more than three years.
These shares were admittedly sold through a recognized, through a registered share broker in the recognized stock exchange in the open market after duly suffering STT. Hence, there is absolutely no reason for the lower authorities to doubt the transaction carried out by the assessee. No case made out by the revenue for justifying the denial of exemption under section 10(38) - Decided in favour of assessee.
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2025 (1) TMI 1286
Disallowance of interest expenses - assessee provided interest-free advances while having interest-bearing loans was justified -whether there was “commercial expediency” in giving interest free advances or loans? - HELD THAT:- We notice that the advances have been given to these three companies during the course of carrying on business for business purposes, i.e., these payments have been given in connection with business ventures with the expectation of profits from the deal that will be entered by the respective parties. Accordingly, the Ld CIT(A) has held that there was commercial expediency in giving these advances without charging interest, since the assessee is expected to get the share of profits from the deal. Further, these three advances continue from the earlier years and the AO did not make any disallowance of interest in the earlier years. CIT(A) was justified in deleting the proportionate interest disallowance.
For the other parties all these balances have been brought forward from earlier years and no disallowance of interest was made in those years. Secondly, the interest free funds available with the assessee are in far excess of these outstanding amounts. Accordingly, we are of the view that there is no requirement of disallowing any interest expenses vis-à-vis these outstanding balances.
Also account has been brought forward from earlier years and no disallowance of interest was made in those years.
Advances have been given in the earlier years and no disallowance of interest was made in those years. Since these advances have been given for business purposes, we are of the view that the Ld CIT(A) has rightly deleted the disallowance of proportionate interest in respect of both these advances.
Some advances have been given on commercial expediency during the course of carrying on of its real estate business. And sufficient interest free funds were also available with the assessee. Decided in favour of assessee.
Disallowance of the provision for expenses - HELD THAT:- There is no dispute that the assessee is following mercantile system of accounting. Under that system, it is mandatory for the assessee to make provision for all known expenses and losses, even if the payments in respect of those expenses have not been made. Unless such kind of provision for expenses are made in the books as at the year end, the financial statements cannot be considered to reflect true and fair view of the company.
The provision for expenses is usually made on some scientific basis at the year end, since the concerned bills would not have been received by the assessee at the time of finalization of accounts. Hence, the assessee would not be in a position to furnish relevant bills in respect of all items.
AR submitted that the provision for expenses are made every year in a routine manner in order to provide for all known expenses and losses in accordance with accounting principles. In the earlier years, the AO had accepted claim of the provision for expenses. Accordingly, we are of the view that the AO was not justified in disallowing the provision for expenses made by the assessee.
Appeal filed by the revenue is dismissed.
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2025 (1) TMI 1285
Disallowance u/s 14A r.w.r. 8D - expenditure relatable to exempt income - HELD THAT:- Average value of investment under the substituted Rules is to be made @1% on average value of investment as held in the case of ACIT vs Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI] wherein, it has been held that for the purpose of computation of disallowance of average value of investment the AO has to take only the instrument which gives rise to exempt income and not the investment which does not give rise the investment. In terms of above, we set aside the order CIT(A) on this issue and remand the issue back to the file of the ld AO in the following terms:-
i. that the AO will find out the investment which gives rise to exempt income.
ii. then the AO will re-compute the disallowance by taking those investment which give rise to exempt income @1% on average value of investment.
iii. the AO will also verify the expenditure as described in proviso to Rule 8D(2)(ii) wherein, it is referred that the amount referred to in clause 1 and clause 2 would not exceed to total expenditure claimed by the assessee. The AO will find out the expenditure claimed by the assessee in terms of above and then will re-decide the issue.
Appeal of the revenue is allowed for statistical purposes and order of the CIT(A) and that of AO is set aside.
Disallowing additional ground raised by the assessee during the course of first appeal - not considering that the income pertaining to the concessional fee received from AAICLAS Co. Ltd has already offered for taxation in AY 2018-19 - HELD THAT:- As both the sides and going through the facts of the case, notice that the income as claimed by the assessee which is already offered for taxation in AY, needs verification. Before us, assessee could not explain how this income of Rs. 102.88 is included in this income of Rs. 232.67 offered in AY 2018-19.
At one point of time, the ld counsel made submission that part income falls in AY 2018-19 and part falls in AY 2019-20. The entire controversy raised by assessee seems plausible and there should not be double taxation of an income. There is no impediment for Tribunal not to entertain new claim as held in the case of Goetze India [2006 (3) TMI 75 - SUPREME COURT]wherein as laid down the principle that appellate authority can entertain a fresh claim. Hence, we admit this additional ground and set aside the order of the CIT(A) and remand this issue back to the file of AO with following directions:-
i. AO will first examine income offered for taxation for AY 2018-19 amounting to Rs. 232.67 crores, whether the same includes the income of Rs. 102.88 crores as claimed by the assessee and admitted in AY 2019-20 i.e., the present assessment year. In case this is admitted in AY 2018-19 or even part of this income is admitted in AY 2018-19, the same has to be excluded in the present AY.
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2025 (1) TMI 1284
Notice u/s 143(2) issued by the non-jurisdictional officer - As argued jurisdiction could not have been transferred from ITO, Ward 11(3) to Circle 11(2) without order u/s 127 - as submitted Jurisdiction lies only with DCIT, however the statutory notice u/s 143(2) was issued by the ITO instead of the present Assessing Officer i.e. DCIT.
HELD THAT:- Revenue has not brought on record an order u/s 127 of the Act passed in order to transfer the case to DCIT, Circle 11 (2), New Delhi except making the submissions that assessee should file the objection within one month u/s 124(3) of the Act. Since the issue of notice u/s 143(2) is the basis of initiation of the assessment u/s 143(3) and the jurisdictional officer should have issued the notice and also completed the assessment.
The present Assessing Officer has completed the assessment without following the due process of law and we are inclined to hold that the jurisdictional notice u/s 143(2) was not issued by the DCIT before completing the assessment u/s 143(3) of the Act and that there is an unwarranted defect in this case which is not curable. Decided in favour of assessee.
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2025 (1) TMI 1283
Addition u/s. 69A - reliance on dumb documents found during the course of search - HELD THAT:- AO has made the additions on all the items found during search from the diary, but CIT(A) has restricted the additions to those entries only which were reflected in the books of accounts. In our considered opinion, the ld. Counsel’s submissions that wrong section is mentioned is not fatal over here, as additions have been made on account of unexplained items found during the course of search from the diary.
Hon’ble Madras High Court in the case of M. Vivek [2020 (11) TMI 953 - MADRAS HIGH COURT] has duly held that loose sheets picked u/s 132, falls within definition of ‘document’ mentioned in section 132(4) and therefore, it has got evidentiary value. The decisions referred by assessee has no bearing on the present facts of the case. Decided against assessee.
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2025 (1) TMI 1282
LTCG - Denial of deduction u/s 54F - assessee failed to furnish the possession certificate, electricity bill etc. in order to establish the fact of possession being taken within the prescribed statutory time limit - HELD THAT:- Assessee made payment to the builders for the purchase of the new property even more than the capital gain earned. There was no delay on the part of the assessee who deposited the full amount of capital gain but the possession was not handed over by the builder which is an admitted delay on the part of the builder and because of such default of the builder in not completing the construction and handing over possession to the assessee within the time prescribed benefit of Section 54 to 54F cannot be attributed to the assessee particularly when the assessee has complied with all the statutory conditions in order to claim benefit u/s 54F.
Most of the builders generally failed to complete their purchase in stipulated period and hardly any builder could complete their project within the promised time. In the event, if the builders are not able to deliver the flats within the target period, and if, the assessee invested the requisite amounts in such projects within the prescribed time, benefit of Section 54/54F cannot be denied to thousands of such cases.
The provisions of section 54 are beneficial sections and therefore, it is to be interpreted liberally. If the assessee has completed his part of the job, in that case he is entitled to the deduction if the other part has not been completed because of the situation beyond the control of the assessee. Thus, For claiming exemption u/s 54, it is not necessary that the Assessee should obtain possession of the new asset or become the owner of such new asset by way of registration of document within the time limit as specified therein as long as the Assessee has acquired substantial domain over the new asset and paid substantial amount of its cost within such specified time limits.
Section 54 is a beneficial provision and it could never be the intention of the legislature to deny the benefit of such deduction in such bonafide deserving cases.
Hon’ble Apex Court in the case of Sanjeev Lal [2014 (7) TMI 99 - SUPREME COURT] wherein it has been held that adverse inference against the assessee cannot be made in this regard. Decided in favour of assessee.
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2025 (1) TMI 1281
Assessment u/s 153A - entries found recorded in the diary seized from the residential premises of Third party - HELD THAT:- The entries found recorded in the diary seized from the residential premises of RKY is not capable of incriminating the assessee company per se. Additions made qua such entries thus are not justified within sweep of s. 153A of the Act.
On merits also, the impugned addition is not justified in the absence of any culpability established against the assessee company by some irrefutable evidence as noted above.
Revenue has failed to tie the contents of impugned entries discovered from third person with that of assessee co. The statutory presumption is thus not available in the instant case. The onus thus continues to lie at the doorstep of Revenue that the transactions/ entries were consummated by the assessee indeed. Such onus has not been discharged at all. The allegation leveled against the assessee co. is in the realm of bald. Coupled with this, simultaneous addition based on such entries in the hands of other entity militates against action of the revenue and erodes the very foundation of the impugned additions.
Substantial merit in the plea of the assessee on both counts namely lack of jurisdiction u/s 153A for making impugned additions dehors any incriminating material as well as additions being devoid of any merit in the absence of any credible corroboration that such entries unflinchingly relates to the assessee company in exclusion to other entities. Decided in favour of assessee.
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2025 (1) TMI 1280
Rejection of registration u/s. 12AB - rejecting application filed online by the assessee in Form 10AB u/s. 12A(1)(ac)(iii) - selecting the incorrect sub-clause during the online application process - HELD THAT:- In this case, the assessee by virtue of order of Ld.CIT(E) albeit dated 08.11.2023 was enjoying registration u/s. 12AA of the Act after enquiry from AY 2020-21 onwards until it was rejected by Ld.CIT(E) vide the impugned order dated 17.05.2024, which action of Ld CIT(E) cannot be countenanced, being not in consonance with the new scheme of registration after TOLA-2020.
Assessee-Trust being an old trust (before TOLA came into force) was legally entitled for registration u/s. 12AB(1)(a) for five (5) years; and because of inadvertent mistake of filling up for renewal under sub-clause (iii) instead of sub clause (i), the assessee’s right for re-registration u/s. 12AB of the Act for AY 2022-23 onwards cannot be denied, which action would offend Article 14 of the Constitution of India, which guarantees inter-alia that equals to be treated equally and therefore, a different treatment cannot be given to assessee-Trust, which will tantamount to discrimination.
Inadvertent mistake of the assessee clicking online for fresh registration under clause (iii) of sec.12(1)(ac) needs to be intervened and rectified; therefore, the assessee’s application for registration under sub-clause (iii) needs to be treated as if assessee has applied under clause (i) of sec.12A(1)(ac) and granted registration u/s. 12AB(a) for five assessment years from AY 2022-23 onwards.
Restore the assessee’s application for registration back to the file of the Ld.CIT(E) and direct him to process the application filed by assessee on 08-11-2023 in Form 10 as if filed u/s. 12A(1)(ac)(i). Appeal filed by the assessee is allowed for statistical purposes.
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2025 (1) TMI 1279
Income taxable in India or not - income from the provision of distance learning courses - AR submitted that the Authorised Training Centres (ATC) have been wrongly considered as agents of the assessee without appreciating the fact that the activities of the ATCs i.e. registration and training of students was carried out by them in their ordinary course of business in an independent capacity - relationship between the assessee viz. IATA, Canada and the ATCs was on principal to principal basis and there was no element of agency between them - HELD THAT:- Respectfully following coordinate bench case in assessee's own case for AY 2012-13 [2021 (6) TMI 2 - ITAT MUMBAI] we hold that addition made towards provision of distance learning courses by treating the ATCs as DAPE of the assessee is not sustainable and the AO is directed to delete the addition made in this regard.
Joining & annual fees collected towards IATA clearing house facility (ICH facility) and data processing charges - AR argued that the joining annual fee toward ICH facility is not taxable on the principle of mutualy - HELD THAT:- We notice that addition is made on the similar grounds that the principle of mutuality is not applicable for the charges for provision of Data Processing.
AO/DRP have relied on their own order of AY 2012-13 in this regard. On perusal of nature of charges, we are of the view that Data Processing charges are received towards services to airlines and agents using iiNet and weblink and therefore are similar to ICH facility fees.
As already held that the ICH facility fees is not taxable in India for the reason that the principle of mutuality is applicable as has been held by the Co-ordinate Bench in assessee’s own case for AY 2012-13. Therefore, applying the same ratio, we hold that the data processing charges which are similar in nature cannot also be taxed as income in India as attributable to Indian branches.
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2025 (1) TMI 1278
Disallowance being sales promotion expenses - HELD THAT:-Assessee had acquired a new unit and the expenditure was incurred for which bills related to sales promotion expenditure were filed before the Ld. CIT(A) and the same was allowable as the business expenditure u/s 37(1).
CIT(A) did not allow the expenditure as no details of the unit acquired nor other details were filed. Since the details of the unit acquired have been filed before us, the expenditure relates to 10.01.2010 while the unit was acquired on 14.08.2009 and the bills have been filed, hence the expenditure claimed is allowed as a deduction u/s 37(1) of the Act being in the nature of sales promotion expenses. Decided in favour of assessee.
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2025 (1) TMI 1277
TDS u/s 195 - Non-Deduction of tax on foreign payments - assessee has argued that the foreign associates are predominantly individuals and in some cases are body corporate and these services rendered are either professional services or business profit as per respective DTAA - HELD THAT:- Though, the AO in the order has observed that if the relevant DTAA provides the clause of independent personal services which includes legal services, the assessee is eligible to available the benefit. However, he has considered entire amount paid as fee for technical services and levied tax to be deducted and interest u/s. 201(1A) without examining the relevant DTAA.
As relying on Sri Subhatosh Majumder [2015 (11) TMI 1544 - ITAT KOLKATA] we direct the A.O to examine the assessee’s plea that payments were non taxable in India because of the beneficial provisions of the DTAAs with respective countries. The A.O shall grant adequate opportunity of being heard to the assessee and will also permit him to furnish necessary documents and evidences in support of his claim. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.
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2025 (1) TMI 1276
Addition relatable to 12 creditors - assessee could not explain the sources of loan - as argued assessee has discharged her onus by providing the PANs, that the entire transactions were carried through the Banking Channels including repayment - HELD THAT:-Onus was on assessee to establish the creditworthiness of the loan creditors and the assessee has failed to file sufficient documentary evidences, in this regard, to the satisfaction of lower authorities. Further, it would make no difference whether the amounts are received in cash or through banking channel.
The provisions of Sec.68 would still be attracted to the assessee in both the cases. In fact, the assessee is debarred from accepting loans in cash beyond specified limits as laid down u/s 269SS.
Therefore, these arguments stand rejected. Considering the fact that the assessee has failed to discharge the onus of establishing the creditworthiness of the 12 parties, we provide another opportunity to the assessee to substantiate the same before Ld. AO. Accordingly, the issue of impugned addition stand restored back to the file of Ld. AO for fresh consideration with a direction to the assessee to substantiate the loan creditors. Appeal stand allowed for statistical purposes.
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2025 (1) TMI 1275
Unexplained cash deposits in the bank account - cash sales of the Assessee for the year under consideration were higher than that of earlier assessment year - Assessee explained that the cash deposits were out of sale proceeds of the Assessee - HELD THAT:-Assessee has explained that the Assessee during the year, was a trader of artificial goods and flowers. That during the year, the Assessee decided to stop its business. Assessee, therefore, sold its opening stock at discounted rates resulting into higher sales during the year under consideration as compared to the earlier years.
Assessee has further submitted that there is no rebuttal to the fact on the file that the Assessee was having opening stock out of which the said sales were made. That the Sales tax / VAT Return were also filed by the Assessee.
No justification on the part of the lower authorities in treating the deposits made by the Assessee out of the sales of the opening stock as income from undisclosed sales. Decided in favour of assessee.
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2025 (1) TMI 1274
Applicability of transfer pricing provisions to the transactions between an enterprise and its Permanent Establishment (“PE”) - Whether or not the transactions between an enterprise and its foreign permanent establishment can be considered international transactions for the purpose of section 92B, and accordingly can be subjected to the ‘arm’s length price’ adjustment? - HELD THAT:- The ultimate aim of Chapter -X of the Act is to determine the arm's length price of the transaction. The methods prescribed are only the means of achieving the object of the ALP determination. The purpose of transfer pricing provisions is to achieve reasonable, fair and equitable profits and tax in India.
The above view is also echoed by the Hon’ble Supreme Court in Morgan Stanley & Co [2007 (7) TMI 201 - SUPREME COURT] wherein observed that the object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India.
The transfer pricing provisions need to be interpreted keeping in mind the above objective of fair and equitable tax allocation. In the instant case, the PO has undertaken onshore services on behalf of HO and incurred substantial losses in executing such services.
Whether unrelated party would have taken up the obligation of rendering onshore services, which at the threshold itself result in loss? - As per section 92B(1), to qualify as international transaction, atleast one party should be non- resident. The residential status of the branch is that of its head office. In case of Indian enterprise and its foreign PE, both are residents in India. Thus, the condition that at least one party should be non-resident does not get fulfilled in the case of Indian enterprise and its foreign branch.
However, in the case of foreign enterprise and its Indian branch, both parties are non-residents. Thus, the condition of section 92B(1) of the Act that atleast one party should be non- resident gets satisfied in the case of foreign enterprise and its Indian branch.
Whether PE a Separate Enterprise? - PE in India of a foreign enterprise, Article 7(2) provides that profits, which the PE might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities shall be attributed to India. So, PE has to be treated as a distinct and separate enterprise. So even if profit attribution has to be done as per treaty, PE has to be treated as a distinct and separate enterprise from the HO. Therefore, even under the tax treaty, the PE is a separate enterprise.
Since, PE is a separate enterprise from the HO for the purpose of transfer pricing provisions, the decisions relied by the learned AR to contend that one cannot generate income by dealing with self are not applicable in given context. The transfer pricing provisions are applicable to transactions between two enterprises and not between two persons. Thus, decisions in the case of Sir Kikabhai Premchand [1953 (10) TMI 5 - SUPREME COURT] Betts Huett & Co Ltd [1978 (4) TMI 58 - CALCUTTA HIGH COURT] & Sumitomo Mitsui Banking Corporation [2012 (4) TMI 80 - ITAT MUMBAI] are not applicable in the context of transfer pricing.
Income arising from International Transactions - AR has contended that there is no income arising out of international transactions in the current case as there is only fund movement between HO and PE and actual transactions are between PE and third parties - Section 92 of the Act brings income arising from international transaction within the ambit of transfer pricing provisions. The international transaction is between the associated enterprises. So as a first step one needs to evaluate whether there are two enterprises and such enterprises qualify as associated enterprises u/s 92A of the Act. Such AE's should have entered into international transactions satisfying the test of either u/s 92B(1) or 92B(2) of the Act. Such international transaction should give rise to income which is within the taxing ambit of charging provisions of the Act.
In our view, PO and HO are separate enterprise. Further as per Article 7(2) of the India-China DTA A and para 15, 16 & 17 of the commentary on Article 7 on Model tax convention published by OECD in 2010 also states that permanent establishment is to be treated as a functionally separate entity. PO and HO have transaction between them which has an impact on 'income'. Both are non-residents and thus satisfy the basic test of section 92B of the Act. Whether they qualify as AEs within the meaning of section 92A is discussed below.
Associated Enterprise - AR submitted that the TPO has erred in concluding that PO and HO are 'associated enterprise' merely by evaluating section 92A(1) - Transaction between an enterprise and an unrelated person should have been influenced by the associated enterprise of the first party having an arrangement or agreement with the unrelated party. The associated enterprise and the unrelated person can be said to have exercised influence over the transaction in question, if the terms of such transaction would have been different but for such influence. Therefore, where the associated enterprise and the unrelated person have not been able to influence the specific transaction between an enterprise and the unrelated person, section 92B(2) of the Act does not have any application. The influence to attract section 92B(2) of the Act can take two forms. Firstly, it can be in the form of a prior agreement in relation to the transaction in question (between the associated enterprise and the unrelated person). Secondly, the terms of the transaction have to be in substance determined by the associate enterprise and the unrelated party. It is possible that these two forms may be satisfied in a fit case.
DTAA v Act - PE of a foreign enterprise in India, the Article 7(2) provides that profits that will be attributed to PE shall be profits which the PE might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a PE.
Article 7(2) of the India China DTAA leads to the conclusion that determination of profits under the hypothesis of the PE being a distinct and separate enterprise, dealing wholly independently with the enterprise of which it is a PE, is nothing but adherence with the arm's length principles. The underlying philosophy of TP provisions and Article 7(2) is same wherein both try to analyse as to how third parties would have dealt with each other under uncontrolled conditions. Thus, contention of the learned AR that there is conflict between Article 9 of the DTAA and domestic TP provisions is rejected.
We are of the view that the transaction between foreign enterprise and its PE in India can be considered as an international transaction and be subject to ALP adjustment. The matter may be placed before the Division Bench to give effect to the direction of this Order
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2025 (1) TMI 1273
Status of the Appellant is a Non-Resident Indian and not a Resident of India - Period of stay in India - interpretation of the provisions of DTAA and section 6 of the Act defining the residential status of assessee - HELD THAT:- According to second condition if assessee has remained in India in last four years for more than 365 days and in relevant previous year for more than 182 days, then only shall be treated as non-resident
Assessee submitted that in relevant previous year, he was in India for 132 days only which is less than 182 days and therefore, assessee is not resident as per either of the conditions of section 6(1) of the Act. The assessee has filed evidence in support of employment outside India and also filed visit passes.
In view of the evidences filed before us, we feel it appropriate to restore this issue back to the file of the Assessing Officer for verification of residential status of Singapore as well non-residential state in India particularly in view of the Explanation 1 to section 6(1)(c) of the Act and decide the issue in accordance with law. The grounds Nos. 1 to 3 of the appeal of the assessee are accordingly allowed for statistical purposes.
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2025 (1) TMI 1272
Addition u/s 69A - cash deposited in bank account out of sale proceeds which stood recorded in the books of account and credited to profit & loss account - HELD THAT:- Sales made by the assessee and shown in the regular books of account have been accepted as such by VAT authorities while framing the VAT assessment; that the assessee was having sufficient stock in hand for making the impugned sales during the demonetization period and that it is not the case of the AO that the assessee has shown bogus purchases to show bogus sales to cover up cash deposited during the demonetization period.
We hold that the CIT(A) decision in infirm and perverse to the facts on record in confirming the addition u/s 69A. Accordingly, the addition made by invoking provisions of section 69A of the Act is held to be illegal and bad in law and as such, same is deleted.
Applicability of the tax rate as per provisions of section 115BBE also stand rejected, accordingly. Decided in favour of assessee.
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2025 (1) TMI 1242
Block assessment u/s 158BC - penalty levied u/s 158BFA - offences allegedly committed u/s 276C and 277 r.w.s. 278B - Delay in filling SLP - as decided by HC [2023 (8) TMI 162 - BOMBAY HIGH COURT] since, the Revenue has failed to produce the satisfaction note we have to and we hereby hold that the search action u/s 132(1) and, consequently, the block assessment order passed u/s 158BC, order levying penalty u/s 158BFA cannot survive as they are all predicated on the existence of a valid search - HELD THAT:- There is a gross delay of 404 days in filing the Special Leave Petitions which has not been satisfactorily explained by the Revenue.
Even otherwise, we see no reason to interfere with the common impugned orders passed by the High Court.Special Leave Petitions are, accordingly, dismissed on the ground of delay as well as merits.
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9911796707
