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2022 (7) TMI 1529
Unexplained cash-deposits in bank account - AR submitted that the assessees are agriculturists and they have sold rural agricultural land and received cash component which was deposited in the bank accounts - HELD THAT:- We observe that the assessees have filed certain evidences before Ld. CIT(A) during the course of appellate proceeding to justify the sources of cash deposits, although the same could not be filed before the Ld. AO.
We also observe that the assessees are agriculturists who have sold the agriculture land and it is quite possible that the land is situated in rural area and therefore not taxable. But, however, the capital gain has been taxed by AO for the lack of evidence. We observe that tax has to be paid on proper taxable income and the proper taxable income can be computed only after examining the relevant evidences. We further observe that the assessees are agriculturists and did not have sufficient means to deal the income-tax issues adequately.
Therefore, in the interest of granting substantial justice to the assessees, we are of the considered view that an opportunity should be given to assessees to represent their case fully before the Ld. AO. Appeals of assessee are allowed for statistical purposes.
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2022 (7) TMI 1528
Disallowance of employees' contribution to ESIC and PF u/s 36(1)(va) - Appellant had deposited the employees’ contribution of PF and ESIC before the due date of filing of Return u/s 139(1), though the same were deposited belatedly beyond the due date specified under the respective statutes - HELD THAT:- A perusal of Form 3CD, the form prescribed for filing tax audit report, would show that the tax auditor is not just required to identify and provide details of disallowance of expenditure. Form 3CD also provides for disclosures of various information/details relating to an assessee such as the nature business/profession, books of accounts maintained etc. Further, not all clauses of Form 3CD require the tax auditor to express an opinion. Some of the clauses require the tax auditor to just provide information/details. Clause 20(b) of Form 3CD falls in this category. The tax auditor is merely required to provide ‘Details of contributions received from employees for various funds as referred to in section 36(1)(va)’.
This becomes clear on examining other clauses which specifically require the tax auditor to express an opinion, such as Clause 21(b) requiring disclosure of amounts inadmissible u/s 40(a), Clause 21(d) requiring disclosure of amounts inadmissible under Section 40A(3) of the Act and Clause 21(e) requiring disclosure of amounts inadmissible under Section 40A(9) of the Act. Since Clause 20(b) of Form 3CD does not require any expression of opinion on the part of tax auditor, it cannot, in our opinion, be said that disclosure made by tax auditor in the aforesaid clause constitutes a ‘disallowance of expenditure indicated in the audit report’ triggering the provisions of Section 143(1)(a)(iv) of the Act. In any case the issue stands decided in favour of the Assessee by the decision of Kalpesh Synthetics Pvt. Ltd., [2022 (5) TMI 461 - ITAT MUMBAI].
Ground raised by the Appellant in the present appeal are allowed and addition/disallowance made u/s 36(1)(va) pertaining to deposit of employees’ contribution to ESIC/PF after the due date specified in the applicable statute but before the due date of filing income tax return prescribed under Section 139(1) of the Act stands deleted. Decided in favour of assessee.
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2022 (7) TMI 1527
Addition of interest u/s. 36(1)(iii) - interest bearing funds had been utilized for interest free advances - HELD THAT:- In the present case, the balance sheet of the assessee, which was available with the ld. CIT(A) and which clearly demonstrate that the capital of the assessee was more than Rs. 4,23,30,014/- as on 31.03.2006 and moreover the profit was Rs .41.70 lacs, which is much more than the amount of interest free advances amounting to approximately Rs. 15.00 lacs. Therefore, the disallowance sustained by ld. CIT(A) is not in accordance with law and facts of the case and therefore we delete the same and allow Ground No.1 of the appeal.
Disallowance out of contribution towards group gratuity scheme paid to Life Insurance Corporation of India - HELD THAT:-While denying the claim to the assessee, the ld. CIT(A) has ignored various case laws which was relied on by the assessee for the proposition that the expenditure incurred by assessee towards payment for gratuity group scheme of Life Insurance Corporation of India is a deductable expenditure. We find that the assessee has made the payment to Life Insurance Corporation of India, therefore, the expenditure is an allowable expenditure in view of the judgment of The Guntur District Cooperative Central Bank Ltd. [2018 (8) TMI 192 - ITAT VISAKHAPATNAM] and in view of various other case laws in favour of the assessee, which the ld. CIT(A) has noted in his order. Therefore, Ground No.2 of the appeal of the assessee is also allowed.
Addition u/s 68 - assessee had received certain advances from certain customers -Before ld. CIT(A), it was claimed that such advances were received against the future sales to be made to the parties but it was not accepted by the ld. CIT(A) - HELD THAT:- CIT(A) has held that only a part of advances were got adjusted against sales in the FY 2006-07. While reproducing such chart the ld. CIT(A) has ignored the sales made by the assessee during the FY 2007-08 the details of which was also filed before ld. CIT(A) and during these two years the assessee had issued various bills, whereby it has exhausted the amount - in view of these facts and circumstances, the sustainance of the addition is not justified and is deleted. Ground Nos. 3 and 4 is also allowed.
Appeal of the assessee is allowed.
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2022 (7) TMI 1526
Addition of excess gold jewellery u/s 69A - Search and Seizure operation U/s. 132 - value of gold jewellery weighing 284.600 grams which is found in excess after considering the eligible exemption as per the CBDT Instruction No. 1916, dated 11/05/1994 - HELD THAT:- Gold jewellery belonging to family members was seized to the extent of 1628.025 grams and there is no dispute on the fact that as per the CBDT Instruction No. 1916, dated 11/5/1994 that in a case of a person who is not assessed to wealth tax, gold jewellery and ornaments to the extent of 500 grams per a married lady, 250 grams per an unmarried lady and 100 grams per male member of the family should not be seized.
AO has erred in disallowing the excess gold of 284.600 grams belonging to the mother of the assessee who is staying with the assessee being the only daughter, and considered as belonging to the family members of the assessee. In these peculiar circumstances, we find merit in the argument of the Ld. AR and we are of the considered view that the order of the Ld. CIT(A) needs to be quashed and allow the appeal of the assessee.
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2022 (7) TMI 1525
Rectification order passed u/s 154 - AO found that the assessee has debited prior period expenses to the Profit & Loss Account and loss on sale of RMC, which are not allowable - HELD THAT:- The Hon'ble Supreme Court in T.S. Balram, ITO v/s Volkart Brothers [1971 (8) TMI 3 - SUPREME COURT] held that for initiating proceedings under section 154 of the Act, the mistake apparent from record must be an obvious and patent mistake and not something which can be established by long drawn process of reasoning on points on which there may conceivably be two opinions.
In view of the above, as is evident from the facts available on record, the issue of prior period expenses, inter–alia, on which rectification u/s 154 was done by the AO in the present case is open to divergent views and the same requires long drawn process of examination, therefore, we are of the view that rectification order passed u/s 154 on this issue clearly falls beyond the ambit of expression “mistake apparent from the record”. Consequently, ground no.2, raised in assessee’s appeal is allowed.
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2022 (7) TMI 1524
Appeal dismissed as infructuous on the ground that the assessee has opted for Vivad Se Vishwas Scheme - HELD THAT:- As per statement made AR, assessee has not opted for VSVS in respect of disallowance u/s 40(a)(ia). Considering the same, the impugned order is set aside and Ld. CIT(A) is directed to adjudicate the issue on merits.
Appeal stand allowed for statistical purposes.
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2022 (7) TMI 1523
Grant of ad-interim stay of the outstanding demand - one of the issues agitated in the appeal relates to disallowance of claim made u/s 35(2AB) - as submitted that in case the claim u/s 35(2AB) of the Act, is not being granted to the assessee then, deduction equivalent to 100% of the expenditure deserves to be allowed u/s 37 - An apparent error has crept in the order of the Dispute Resolution Panel (DRP) and the assessee has filed an application for rectification and if the application before the DRP is disposed off, then whole demand will be wiped out and the assessee will be entitled for a refund.
HELD THAT:- Tribunal had adjourned the hearing expecting early disposal of the application before the DRP and refrained from passing any stay order in respect of the demand. However, in the last one month, there has been no development. In view of the above situation, we deem it proper to allow this application with the following directions:-
a) Any demand will be recovered in this assessment order against the assessee only after adjudication of its application filed for rectification before the DRP. Until and unless that application is decided no demand will be recovered from the assessee.
b) This order shall remain in operation for a period of 180 days or till the decision of the main appeal, whichever event occurs first.
c) In other words, it is made clear that the stay is being granted by keeping in mind that rectification application is pending. In case it is decided then, revenue will be at liberty to take appropriate action, if any, available against the assessee for recovery of the demand.
d) The Registry is directed to list the appeal for hearing on out of turn basis on 24th August, 2022.
The stay application is disposed of with the above terms.
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2022 (7) TMI 1522
Assessment u/s 153C - date of receiving documents is to be taken as date of search or not - HELD THAT:- This Court is of the view that the proposed question of law, namely, whether in a case where Section 153C is applicable, date of receiving documents is to be taken as date of search or not has been answered by RRJ Securities Ltd.[2015 (11) TMI 19 - DELHI HIGH COURT] as held proceedings, by virtue of Section 153C(1) of the Act, would have to be in accordance with Section 153A of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction.
It would follow that the six assessment years for which assessments/reassessments could be made u/s 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction u/s153C of the Act, i.e., 8th September, 2010.
In this view, the assessments made in respect of assessment year 2003-04 and 2004- 05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted.
The date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004- 05 were outside the scope of Section 153C and the AO had no jurisdiction to make an assessment of the Assessee's income for that year.
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2022 (7) TMI 1521
Overvaluation of the export consignments to Bangladesh - availing higher benefit of DEPB scheme - rejection of declared value u/r 8 of Customs Valuation (Determination of value of export goods) Rules, 2007 - confiscation of the export consignments u/s 113(d) & (i) of the Customs Act 1962 and imposition of penalty u/s 114 & 114AA of the said Act - HELD THAT:- It is not even the case of revenue that these enquiries were conducted fraudulently. During the adjudicating proceedings commissioner has duly ordered for such market verification on the basis of the same sample that were drawn from the export consignment at the time of seizure. On the examination of the same samples and verification undertaken Commissioner has re-determined the market value of the export consignments and concluded that the value as declared by the exporters was genuine. Revenue in their appeal have sought to place reliance on the market enquiries that were conducted by the DRI without associating the exporter with the same.
It is basic law of evidence that every evidence that is to be adduced in a proceedings against the person should be tested for it veracity and authenticity by the person adjudging the issue. In this case Commissioner has got the market verification done and have rejected the market enquiries undertaken by the DRI. In our view the approach of the Commissioner cannot be faulted.
Admittedly the market enquiries conducted by the DRI during the course of investigation were conducted without participation of the exporter or his authorized representative. The enquiries so done behind the back of the exporter cannot be solely relied for determining the market value of export goods.
Once Commissioner has concluded that the value as declared by the respondent to the Custom Authorities in India is genuine, other charges made against the exporter do not survive. Even if there are certain irregularities found in the export vis a vis the legal requirements in the destination country, (Bangladesh), the same could not be made a ground for proving the misdeclaration of value. For the irregularities committed vis a vis the legal requirements in Bangladesh, it is for the Bangladesh Authorities to proceed against the importer/ exporter of the goods. Neither show cause notice nor the appeal conclusively makes an assertion to that effect.
The appeal filed by the revenue is dismissed.
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2022 (7) TMI 1520
Classification of imported goods - linear accelerator with IMRT for radiological use in the detection of cancerous turnovers - whether the goods imported are parts of the machinery or accessories to the machineries earlier imported? - HELD THAT:- The Respondent, imported from M/s Varian Medical Systems International AG Switzerland various items in two (2) separate identifiable lots described in the commercial invoice no. 320585725-A dated 07.08.2012 as Lot I Upgrade to IGRT and Lot 2 Upgrade to Rapid Arc. The import goods were declared in Bill of Entry No. 7665281 dated 14.08.2012 with benefit of concessional duty under then prevalent Notification No. 12/2012-Cus dated 17.03.2012 [S. No. 474 (ii) and Notification No. 21/2012-Cus dated 17.03.2012 [S. No. 93] as “accessories” of ‘medical linear accelerator, classifiable under Heading 9022.90 of CTA75 and allowed clearance for home consumption after physical examination and on satisfaction of the proper officer of customs about proper and correct declaration of import items made on the bill of entry and payment of correct and appropriate duty assessed thereon.
Hon’ble Supreme Court has in case MEHRA BROS. VERSUS JOINT COMMERCIAL OFFICER [1990 (11) TMI 144 - SUPREME COURT] has held “accessories” to be adjuncts, accompaniments for enhancing functional capability, efficiency of the machine/equipment - In the case of COMMISSIONER OF CENTRAL EXCISE, DELHI VERSUS INSULATION ELECTRICAL (P) LTD. [2008 (3) TMI 22 - SUPREME COURT], Hon’ble Apex Court held a “part” of machine/equipment to be the item/component that is indispensible for functioning of the machine/equipment, i.e., in absence of which the machine/equipment is non-operational.
From ratio of judgment as mentioned above, clear distinction has been made between the parts and accessories. Applying the ratio, it is found that as the Linac was already operational since 2010, the goods imported is 2012 were nothing other than accessories for that machinery as they enhanced the functional capabilities.
Having held that these goods were accessories to enhance the capabilities of functional machine, there are no merits in the appeal filed by the Revenue - appeal dismissed.
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2022 (7) TMI 1519
Revision u/s 263 - admissibility of donations claimed u/s 80G - According to the assessee, it suo moto disallowed the CSR expenditure but claimed it u/s 80G of the Act because the trust and institutions to which the amounts were paid, were already enjoying benefits of registration u/s Section 80G, thus donations made by it will qualify for claim of deduction u/s 80G - CIT did not agree with the contentions made by the assessee on the ground that, expenditure incurred by the assessee are not allowable u/s 37 of the Act and there is distinction between CSR expenditure vis-à-vis donations made by the assessee and assessee cannot claim this expenditure incurred under CSR by taking benefit of Section 80G
HELD THAT:- Pr. CIT has not recorded any finding that the recipients were not enjoying registration u/s 80G of the Act, neither this fact was verified by him. His reasoning is from the angle that there is distinction between the expenditure claimed under CSR expenditure vis-à-vis donation made u/s 80G of the Act. I
We are of the view that, for taking action u/s 263 of the Act, twin conditions should be fulfilled i.e., the order should be erroneous inasmuch as it causes prejudice to the revenue. From the finding of the ld. Pr. CIT, it appears that the ld. Pr. CIT has erred in construing the position of law.
The Hon’ble Delhi High Court in the case of DG Housing Projects Ltd. [2012 (3) TMI 227 - DELHI HIGH COURT] has held that the ld. Commissioner should not simply relegate the point that the assessment order is erroneous to the AO. The ld. Commissioner, after analyzing the record, ought to have recorded a categorical finding and provided valid reasons as to how the assessment order is erroneous.
Commissioner should have recorded a finding about the error that had crept in which required action u/s 263 of the Act. There is no such finding at the end of the ld. Commissioner that recipients were not enjoying registration u/s 80G and that this fact was not enquired into by the Assessing Officer. Therefore, in the absence of this finding, we are of the view that the impugned order is not sustainable and hence the same is quashed. Appeal of assessee allowed.
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2022 (7) TMI 1518
Allowability of education cess and Secondary and Higher Education Cess - allowable deduction u/s 40(a)(ii) or deductibility u/s 37 - AR submitted that cess is not levied on the profits and gains of business, and therefore, does not satisfy the second limb of section 40(a)(ii) - DR submitted that insertion of explanation 3 to section 40(a)(ii) of the I.T.Act by Finance Act, 2022 with effect from 01.04.2005 makes it clear that cess is part of the tax and the same cannot be allowed as a deduction while computing the profits and gains of business of the assessee - HELD THAT:- Explanation 3 to section 40(a)(ii) of the I.T.Act was inserted by Finance Act, 2022 with effect from 01.04.2005, wherein it is clearly stated that any surcharge or cess by whatever name called shall be included in the term “tax”.
In view of the amendment, it is clear that cess forms part of the tax and the same cannot be allowed as deduction by virtue of provisions of section 40(a)(ii) of the I.T.Act. Even prior to the insertion of Explanation 3 to section 40(a)(ii) of the I.T.Act, the Kolkata Bench of the Tribunal in the case of M/s.Kanoria Chemicals & Industries Ltd. [2021 (10) TMI 1153 - ITAT KOLKATA] by following the judgment of K.Srinivasan [1971 (11) TMI 2 - SUPREME COURT] held that education cess is an additional surcharge levied on Income-tax and partakes the character of Income-tax.
As regards the assessee’s specific contention that the cess is not levied on the profits and gains of any business or profession, we find the same is not acceptable. Though cess is calculated as % of Income-tax, effectively, it is a levy on the profits and gains of the assessee.
As significant to note that the word `tax’ is used, in section 40(a)(ii), in conjunction with the words `any rate or tax’. The word `any’ goes both with the rate and tax. The expression is further qualified as a rate of tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains. If the word `tax’ is to be given the meaning assigned to it by section 2(43), the word `any’ used before it will be otiose and the further qualification as to the nature of levy will also become meaningless.
The word `tax’ as defined in section 2(43) is subject to `unless the context otherwise requires’. In that view of the matter, the words `any tax’ in section 40(a)(ii) includes cess. For the aforesaid reasons, the submission of the learned AR is rejected. Since the cess is not an allowable deduction u/s 40(a)(ii) of the I.T.Act, the deductibility u/s 37 of the I.T.Act is not permissible. Ground dismissed.
Denial of Credit of self-assessment tax paid u/s 140A - HELD THAT:- After perusing the material on record, we deem it appropriate to restore this issue to the files of the A.O. The A.O. shall examine the matter and shall give due credit for the self-assessment tax paid u/s 140A of the I.T.Act. Therefore, ground 3 is allowed for statistical purposes.
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2022 (7) TMI 1517
LTCG - deduction u/s 54B - properties purchased by the assessee in the name of the assessee’s wife - HELD THAT:- Hon'ble Supreme Court in the case of Dilip Kumar, [2018 (7) TMI 1826 - SUPREME COURT] as held that while giving benefit to the assessee, the provision needs to be interpreted strictly and in case there is ambiguity, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the revenue.
As decided in the case of Antony Parakal Kurian[2022 (1) TMI 601 - KARNATAKA HIGH COURT] held that the phrase ‘owns’ used by the proviso (a)(i) to section 54F(1) plays a significant role. What is relevant is the assessee should not own more than one residential house, other than the new asset, on the date of transfer of the original asset. The Hon’ble Court held that Section 54F encourages investment in a residential house. For qualifying for the exemption under section 54F, what is mandatory is the investment to be made in a residential house in the name of the assessee only. Section 54F shouldn’t be construed liberally to give wide and liberal interpretation to the word ‘assessee’ so as to include the assessee’s legal heirs as well.
Thus we decline to interfere with the decision of the ld. CIT(A) in disallowing the claim of deduction u/s 54B with regard to the agricultural land purchased - Decided against assessee.
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2022 (7) TMI 1516
Validity of the reassessment order - non providing the reasons of reopening of the assessment by the AO in spite of the specific request made - HELD THAT:- As per record, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of the assessment, therefore, in our considered view, the reassessment order in these circumstances of the case, cannot be upheld.
For reaching this conclusion, we draw strength from the decision of Videsh Sanchar Nigam Ltd [2011 (7) TMI 715 - BOMBAY HIGH COURT] wherein as categorically held that since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of the assessment then reassessment order cannot be upheld and thus dismissed the appeal filed by the Revenue. Reassessment quashed - Decided in favour of assessee.
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2022 (7) TMI 1515
Addition of accommodation entries to various entities - assessee has disclosed commission of 0.15% i.e. @ Rs.150 per one lakh of accommodation entry provided - revenue authorities have accepted the percentage of commission and determined the commission @ 0.15% on all the credits appearing in the bank accounts through which the entries have been routed multiple times - contra entries have not been considered and certain accounts which do not belong to the assessee have also been considered for calculation of the commission amount - DR has argued that the commission of 0.15% has been determined after taking into consideration, the multiple entries of the same amount routed through different accounts. It was argued that otherwise the normal commission rate determined by the Tribunals and High Courts in a number of cases ranged from 1.5% to 3% on the accommodation entries provided
HELD THAT:- We have gone through the statement of the assessee recorded u/s 131(1A), the bank accounts operated by him which are in his own name and which are in the name of others. Keeping in view, the entirety of the accommodation entries, we do not hesitate to hold that the commission earned by the assessee by using the bank accounts in the name of other persons also liable to be taxed in the hands of the assessee only as the assessee is the operator and the beneficiary of these accounts and these accounts standing in the name of other persons have also been undoubtedly used for giving accommodation entries. Thus, the plea of the assessee that the commission cannot be charged pertaining to the accounts doesn’t belong to the assessee is hereby dismissed. With regard to multiple routing of the amounts among various accounts, we are of the opinion that the percentage of commission charged @ 0.15% instead of the normal 1.5% takes care of such multiple routing of entries upto 10 times.
Keeping in view, the entire facts of the case, we hereby hold that the appeals of the assessee on this ground are liable to be dismissed.
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2022 (7) TMI 1514
Income deemed to accrue or arise in India - Royalty receipts - taxability of the money received by the assessee from Indian customers for provision of Telecommunication connectivity services which included international private leased circuits, Multiprotocol Label Switching IP/VPN etc.- assessee is a company incorporated in Singapore engaged in the business of providing digital transmission of data through international private line or multi-protocol label switching etc. to facilitate high speed data connectivity - HELD THAT:- This controversy is now well settled by the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT]
Respectfully following the findings of the coordinate Bench [2020 (10) TMI 604 - ITAT DELHI] for A.Y. 2011-12 and 2012-13, in the light of the decision of in the case of New Skies Satellite BV [2016 (2) TMI 415 - DELHI HIGH COURT] and Hon’ble Supreme Court (supra) we direct the AO to delete the impugned additions from both the assessment years. Decided in favour of assessee.
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2022 (7) TMI 1513
Delayed payment of employees’ contribution towards EPF - deposits made before the due date - HELD THAT:- The said issue is covered in favour of assessee by the decision of Nipso Polyfabriks Ltd. [2012 (11) TMI 592 - HIMACHAL PRADESH HIGH COURT] as held that “there exists no difference between employees or employer’s contribution and both are to be allowed as deduction if deposited before the due date.
The payment of employee’s contribution beyond the due date mentioned in the relevant statute but before the due date of filling the return of income u/s 139(1) is allowable expenditure. Thus, the Ground No.2 of the assessee is allowed.
Nature of receipt - Subsidy received from Govt of Maharashtra under Industrial Promotion Scheme (IPS) - AO treated the subsidy for acquiring the fixed assets and accordingly reduced the subsidy amount from addition to block of plant and machinery - HELD THAT:- The subsidy shall not be reduced from the actual cost of fixed assets u/s 43(1) for the purpose of calculation of depreciation. Thus, respectfully following the ITAT Pune Bench in Shrinivas Engineering Auto Components Pvt. Ltd. [2022 (4) TMI 1486 - ITAT PUNE] the AO is directed to delete the addition of depreciation. Accordingly, Ground No.3 and 4 raised by the assessee are allowed.
Addition of Dividend - AR submitted that the assessee has already offered the said dividend for taxation, hence there is double addition - HELD THAT:- The assessee shall file the required documents before the AO and AO shall verify the facts. If the assessee has already offered the said amount in the return of income there shall not be any double addition. Accordingly, this issue is set aside to the file of the AO for factual verification. Accordingly, the ground is allowed for statistical purpose.
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2022 (7) TMI 1512
TP Adjustment - comparable selection - as submitted high amount of turnover companies cannot be compared to the assessee company as assessee’s turnover is very low compared to those companies - HELD THAT:- As relying on Barracuda Networks India Pvt. Ltd. [2022 (5) TMI 322 - ITAT BANGALORE] we direct the AO to exclude those high turnover companies from the list of comparables.
Tata Elxi Ltd. - We have already directed the AO/TPO to exclude this comparable from the list of comparables on the basis of turnover filter while adjudication in ground No.1(iii).
Persistent Systems Ltd. company is predominantly engaged in the business of providing outsourced software product development services to customers across the Globe from following industries verticals, infrastructure and systems, telecom and wireless, Life Science and Health care and finance services. However, the present assessee before us is in the business of computer radiated designing and development of commercial vehicle systems. The company is developing specific software for associated enterprises. It is also subsidiary of the ultimate holding company. The software development is used enhanced integrating the same with the main produce. Finally, what is being marketed is a final product by the ultimate holding company. The role of company has been that it is a contract software development support services provider. Being so, it cannot be considered as functionally comparable to assessee. Accordingly, on the basis of functionality, we direct the AO/TPO to exclude this company from the list of comparables.
Infobeans Technologies Ltd is providing wide range of services under four verticals i.e. services, automation, enterprise and industries and under the automation services verticals, the company is providing advanced robotic process automation services. Since Infobeans is into diversified activities it cannot be a suitable comparable vis-à-vis the taxpayer which is a routine software development services provider. Thus we direct the AO/TPO to exclude this company from the list of comparables.
Thirdware Solutions - As decided in M/S BORQS SOFTWARE SOLUTIONS PVT. LTD. [2021 (10) TMI 1351 - ITAT BANGALORE] this comparable has been excluded on the basis of turnover filter but before us the assessee stated that it has to be excluded on the basis of non-matching of margin. In our opinion, this has to be examined by the AO/TPO. Accordingly, we remit this issue to the file of AO/TPO for fresh consideration.
Cybage Software Ltd. - as submitted this company having super profit in immediate two financial years and also having huge turnover of Rs. 722.25 crores in the assessment year under consideration - If the functionality of the Cybage Software Pvt. Ltd. is not similar to the assessee and if the turnover was Rs. 722.25 crores in the assessment year under consideration, it has to be excluded on any one of the above reasons. The issue is remitted back to the file of AO/TPO for fresh consideration.
Exclusion of Sagar Soft India Ltd - According to the Ld. A.R., this company is having persistent loss and only in assessment year 2016-17, it was declared profit - If there is loss consistently in immediate previous 3 years then only it would have excluded. On the other hand, if the loss is only in one assessment year out of 3 immediate previous assessment years, this company is to be considered as comparable. Accordingly, this issue is remitted to the AO/TPO for fresh consideration.
Include M/s. S.K. Mile Software Solutions Pvt. Ltd. and stated that the segmental data may be obtained by TPO after calling information u/s 133(6) - We accede to the request of assessee’s counsel and set aside the matter to the file of AO/TPO to procure the relevant data by issuing notice u/s 133(6) of the Act and decide it afresh.
Non-following the direction of Ld. DRP regarding comparable company, M/s. ASM Technology Ltd., wherein Ld. DRP has given specific direction to verify the claim of the assessee that company does not fail in export turnover criteria and the TPO has passed the final order without any verification rejecting the comparable - The issue has to be reconsidered by TPO in accordance with the direction given by the Ld. DRP. Ordered accordingly.
Adjustment of notional interest on outstanding receivables - international transaction or not? - HELD THAT:- As similar issue came up for consideration in the case of MetricStream Infotech (India) Pvt. Ltd.[2020 (4) TMI 883 - ITAT BENGALURU] as held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92 B of the Act.
Also following the earlier decision in Kusum Healthcare [2017 (4) TMI 1254 - DELHI HIGH COURT] it was observed that there are several factors which need to be considered before holding that every receivable is an international transaction and it requires an assessment on the working capital of the assessee. Applying the decision (supra), the Hon’ble High Court directed the TPO to study the impact of the receivables appearing in the accounts of the assessee; looking into the various factors as to the reasons why the same are shown as receivables and also as to whether the said transactions can be characterized as international transactions - thus we deem it appropriate to set aside this issue to Ld.AO/TPO for deciding it in conformity with the above referred judgment - ground raised by assessee stands allowed for statistical purposes.
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2022 (7) TMI 1511
Principle of just punishment - threatening a party in a civil dispute relating to a property and extracting money, which under threat was conceded by the litigating party - HELD THAT:- It cannot be lost sight that when reference is made in a set off for adjustment of periods, the reference is to proceedings within the country. The criminal law of the land does not have any extra-territorial application. Thus, what happens in another country for some other trial, some other detention, would not be relevant for the purposes of the proceedings in the country. The factual scenario is that the Appellant was charged with having a fake passport. He was found guilty and convicted of sentence from 18.09.2002. This had nothing to do with the proceedings against him in India. His sentence would have been completed on 18.03.2007 de hors the aspect of remission or commutation.
The mere fact that there was also a detention order under the Red Corner notice was of no significance. He was again imprisoned from 12.10.2005 till 10.11.2005, i.e. when he was handed over to the Indian authorities. The period till 10.12.2005, when he was serving out the sentence, certainly could not have been counted. That leaves the period of less than a month only, which is really more of an academic exercise.
The detention of the Appellant commence from 12.10.2005 in the present case. On the Appellant completing 25 years of sentence, the Central Government is bound to advice the President of India for exercise of his powers Under Article 72 of the Constitution, and to release the Appellant in terms of the national commitment as well as the principle based on comity of courts. In view thereof, the necessary papers be forwarded within a month of the period of completion of 25 years sentence of the Appellant. In fact, the Government can itself exercise this power in terms of Sections 432 and 433 of the Code of Criminal Procedure and such an exercise should also take place within the same time period of one month.
Appeal disposed off.
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2022 (7) TMI 1510
Disallowance u/s 14A, Loss arising on account of valuation of outstanding liabilities / receivables, Adjustments made in the book profit u/s 115JB following disallowance made u/s 14A on account of foreign exchange fluctuations, Bogus purchases u/s 69C - HC [2020 (3) TMI 552 - BOMBAY HIGH COURT] dismissed revenue grounds as no ground to entertain the questions for consideration - HELD THAT:- The special leave petition will stand dismissed.
Pending application stands disposed of.
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