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Showing 101 to 120 of 1404 Records
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2016 (10) TMI 1304
Unexplained investment in the hospital building u/s. 69 - Admission made by the assessee in statement recorded u/s. 133A - HELD THAT:- In the present case, we find that although the assessee during survey proceedings had admitted as additional income during the period relevant to assessment year 2009-10, however, subsequently vide letter dated 04-03-2009 the assessee has retracted from said admission. Apart from the statement of assessee there is no other documentary evidence which suggest undisclosed income of the assessee. Rather the assessee has furnished credible evidence to substantiate source of funds. In such circumstances addition on the basis of statement recorded u/s. 133A cannot sustain. We find merit in the appeal of the assessee. Accordingly, impugned order is set aside and the appeal of the assessee is allowed.
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2016 (10) TMI 1303
Recomputation of deduction claimed by the assessee u/s 80IB - CIT(A) had summarily rejected the claim of the assessee that R&D activities carried on had no bearing with Pondicherry Unit - HELD THAT:- As stated in the annual report for financial year 2004-05 that R&D carried out by the assessee was to absorb the technology for air assisted direct injection for two stroke engines, and product launch was proceeding as per schedule, for Indian three wheeler application. It is not disputed by the lower authorities that products manufactured at Pondicherry Unit and Maraimalainagar Unit though similar were not identical. That the products were different is clear from the list enumerated in paper book page 110 - products were different - R&D unit itself as such was situated in Maraimalainagar Unit. This is evident from letter dated 15.4.2004 of Ministry of Science and Technology of New Delhi, giving recognition to the R&DRP Unit, placed at paper book page 62. When the assessee asserted that R&D was exclusively for Maraimalainagar Unit and for its products, in our opinion, without any evidence being brought on record the lower authorities should not have taken a view that such expenditure was also relatable to Pondicherry Unit - reallocation of R&D expenditure was not called for in the facts and circumstances of the case. Such reallocation of R&D expenditure and the consequent reduction in claim u/s 80IB of the Act stands deleted.
Benefit of deduction u/s 80IB denied - Foreign exchange fluctuation gain/loss - HELD THAT:- . Rule of consistency requires that when foreign exchange loss is considered as expenditure for calculating deduction u/s 80IB of the Act in earlier years, when there is a surplus in a subsequent year, it should not be excluded. When a similar set of facts permeates through a number of years and there is nothing on record to show that a different view was required to be taken on such set of facts, though rule of res judicata does not apply to income tax proceedings, rule of consistency has to be applied unless there is a gross violation of law which calls for a deviation. We are of the opinion that the lower authorities erred in not allowing the claim of deduction u/s 80IB of the Act on foreign exchange gains.
Reallocation of electricity and rental expenditure incurred for the Head Office to the Pondicherry Unit while working out deduction u/s 80IB - HELD THAT:- As decided in own case [2011 (4) TMI 1342 - ITAT CHENNAI] it was held by this Tribunal that assessee could not show why the Head Office expenditure ought not have been allocated in proportion to total turnover. The facts and circumstances being the very same, we do not find any reason to interfere with the order of the CIT(A) in this regard. Ground Nos. 9 & 10 are dismissed.
Claim of deduction by the R&D Unit of Maraimalainagar Unit disallowed - HELD THAT:- Assessee being already into the line of manufacturing fuel injection systems, developing the technology for an improved version of fuel injection system cannot be considered as a new venture at all. In taking this view, we are just fortified by the judgment of Apex Court in Alembic Chemical Works Co. Ltd [1989 (3) TMI 5 - SUPREME COURT] - We also note from the break-up of expenditure given by the assessee in page 64 of the paper book that these were salaries, travel and administrative expenditure, technical guidance, components, consumables and tools, preliminary fee etc. These payments do not give any enduring benefit to the assessee nor result in acquisition of any capital asset. In the circumstances, we are of the opinion that the disallowance was not called for. Such disallowance stands deleted.
Upward adjustment for notional interest calculated on the advances given by the assessee to its wholly owned subsidiary called M/s Amtec Precision Products Inc, in USA - HELD THAT:- Finding a comparable uncontrolled transaction, where a loan was given to an entity which was subsidiary to the tested party, and whose capital stood completely eroded due to loss was not practical or feasible. The simple reason is that no other person would have given any loan to such an entity, whatever might be the interest rate since the chances of recovery was negligible. In such a situation, when there could have been no reasonably identifiable comparable uncontrolled transaction, computation of comparable uncontrolled price by applying of Rule 10B(1), fell at the threshold.
Section 92C(1) prescribes computation of ALP by comparable uncontrolled price method, resale price method, cost plus method, profit split method, transactional net margin method and any other method prescribed by the Board could have been applied. In our opinion, the question of benchmarking the transaction of the nature mentioned, applying any of the methodology prescribed in sec.92C(1) did not arise at all due to the particular facts and circumstances. According to us, fastening of an interest rate on the assessee when there was no comparable uncontrolled rate that could have been identifiable was incorrect. We, therefore, have no hesitation in deleting the addition made by the Assessing Officer/TPO.
Interest u/s 234A - HELD THAT:- We are of the opinion that this matter can be looked into by the Assessing Officer and if there was no delay in filing the return, question of levy of interest u/s 234A of the Act would not arise. Accordingly, this ground is allowed for statistical purposes.
Addition based on TDS certificates - payment to the assessee fell u/s 194J of the Act and sec. 194C was mentioned by mistake - HELD THAT:- Assessee had placed before the Assessing Officer letter dated 5.6.2013 issued by M/s Visteon Climate Systems India Ltd where they had mentioned that they had received some testing service from the assessee on which it had made a provision of ₹ 32 lakhs in its accounts. It was also mentioned by the said party that the payment to the assessee fell u/s 194J of the Act and sec. 194C was mentioned by mistake. It is also not disputed that Form 16A was updated by the deductor. In such circumstances, we are of the opinion that the addition ought not have been made just for a reason that a mistake was committed by the deductor in the TDS certificate issued. In addition there was nothing on record to show that assessee had rendered any services which could earn it income of ₹ 1.6 crores. In our opinion, the addition was not called for. Such addition stands deleted. Ground of allowed.
Deduction u/s 80IA claimed on windmill division - HELD THAT:- We find that the issue raised by the assessee is squarely covered in its favour by the judgment of the Jurisdictional High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. [2010 (3) TMI 860 - MADRAS HIGH COURT] - The SLP filed by the Department against the said judgment was dismissed by the Apex Court. In such circumstances, we are of the opinion that prior year depreciation could not have been forcibly set off against the income of the assessee when the initial assessment year for which the assessee preferred the claim was different. We, therefore, allow Ground raised by the assessee.
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2016 (10) TMI 1302
Penalty u/s 271(1)(c) - Defective notice - Addition u/s. 68 on account of unexplained cash credit - HELD THAT:- Notice u/s.274 r.w.s.271 of the Income Tax Act issued by the AO. It is a printed form with so many clauses. This notice does not specifically point out as to whether there is any concealment of particulars of income or furnishing any inaccurate particulars of such income but across the printed line, there is a big tick mark.
The show cause notice u/s. 274 of the Act is defective as it does not spell out the grounds on which the penalty is sought to be imposed. Following the decision of M/S MANJUNATHA COTTON AND GINNING FACTORY & OTHS., M/S. V.S. LAD & SONS, [2013 (7) TMI 620 - KARNATAKA HIGH COURT] we hold that the order imposing penalty has to be held as invalid and consequently penalty imposed is cancelled. - Decided in favour of assessee.
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2016 (10) TMI 1301
Benefit of deduction u/s 80P - return of income was not furnished within the time limit prescribed u/s 139 - Assessee is primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969 - HELD THAT:- Belated filing of return of income by the assessee does not disentitle it from the benefit of deduction u/s 80P(2) of the Act. Further, the assessee, in the instant case, is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record.
The Hon’ble High Court, in assessee’s own case and [2014 (11) TMI 843 - ITAT COCHIN] had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, I hold that the assessee is entitled to the benefit of deduction u/s 80P(2) - Decided in favour of assessee.
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2016 (10) TMI 1300
Implementation of order under challenge before CESTAT - appeal directed against the order of refund is pending before a higher forum/CESTAT - HELD THAT:- Merely because an appeal directed against the order of refund is pending before a higher forum/CESTAT, does not mean that the order under challenge before CESTAT is incapable of implementation and enforcement. If that is not stayed then the enforcement is permissible. While enforcing that order and making any payment, all that can be clarified is that the said act would be subject to the outcome of the appeal which is raising a substantive challenge.
Appeal dismissed.
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2016 (10) TMI 1299
Penalty u/s 221 - failure on the part of the assessee to remit the TDS in time - HELD THAT:- Levy made under section 221 is in accordance with law and hence the Department’s ground is sustained in this regard
Non-payment of TDS in time is a serious violation of the Trust reposed by the Government on the deductor. Such an action causes serious problems to the payees as they were not getting credit for the tax paid by them by way of TDS. In fact the AO records that the Department received complaint from the assessee for not issuing TDS certificates despite repeated request. The delay in remittances are in the range of four months to fifteen months.
As in Relience industries Ltd v CIT & others [2015 (7) TMI 812 - BOMBAY HIGH COURT] held that “the obligation to deduct and pay tax upon the assessee is unconditional under the Act. It is the responsibility of the assessee to deduct taxes and to pay to the Revenue within the period provided under the Act. Financial stringency would not justify deducting tax from the amount paid to the payee and not paying it to the Revenue. Otherwise, it would amount to using somebody else's money for the purposes of one's business. In such circumstances, the question of financial stringency, to our mind, hardly gives rise to a good and sufficient reason for not depositing tax which was an amount otherwise payable to the payee or on behalf of the payee to the Revenue.”
Assessee’s plea cannot be accepted as good and sufficient reason for not depositing tax within time - levy made by the AO at the rate of 5% per month on the defaulted TDS is unreasonable. We consider that levy of penalty u/s.221 @ 10% on the unpaid TDS at ₹ 2,05,55,731/- would meet the ends of justice. Hence the AO is directed to restrict the levy to ₹ 20,55,573/- in the place of ₹ 77,95,155/-. - Decided partly in favour of revenue
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2016 (10) TMI 1298
Unexplained expenditure u/s 69C - unexplained expenditure of payment of kickbacks - assessee's name appears in the list mentioned in the Volcker Committee Report as a result of Independent Enquiry Committee (IEC) appointed by the United Nations Security Council to investigate the administration and management of Oil-for-Food Programme in Iraq - onus of proving such expenditure is actually incurred - HELD THAT:- Observations of VCR cannot be the basis for invoking the provisions of section 69C especially in the facts of the present case, where majority of the contracts were prior to the period mentioned in VCR. Secondly, the assessee already had subsisting contract with KME under which in respect of all exports to various others countries including Iraq commission was paid @ upto 12.5%, wherein the said agent had to provide after sales service also. No extra commission was paid in respect of exports to Iraq. The assessee has time and again stressed that the payments were made through normal banking channel through authorized foreign exchange dealers and not through the banks which are listed in the VCR. Accordingly, we hold that there is no merit in application of provisions of section 69C of the Act in the present facts of the case and accordingly, we direct the Assessing Officer to delete the addition made on account of unexplained expenditure
Disallowance u/s 37(1) - payments as ASSF and ITF were in the nature of kickbacks - HELD THAT:- Assessee claims to have made payments to Al Azhar and KME in assessment year 2002-03 and where the assessee has failed to establish whether any services have been rendered by the said concerns and in view of the documents, evidences referred to by us with regard to these transactions, where admittedly, the amount was paid for service charges, the same are hit by Explanation to section 37(1) of the Act. With regard to Alia, the payments are made against transportation services. The assessee has filed the copies of invoices which are CIF, Baghdad and where it was its duty of assessee to deliver the goods at Baghdad, the remuneration paid to Alia @ 10% of the value of contract, which finds clear mention in VCR is payment by way of kickbacks to the IG and is covered by Explanation to section 37(1) of the Act and the same is not allowable as deduction to the assessee. This is a case where the persons were aware that the payments as ASSF and ITF were in the nature of kickbacks and were thus, willing parties to the illegal gratification and hence, are thus, hit by Explanation to section 37(1) of the Act. Since the assessee has failed to establish its case of KME has given its services in the absence of any distribution agreement, the payment made to KME is disallowed under section 37(1) of the Act. In this regard, we refer to the findings of CIT(A) in assessment years 2002-03 and 2003-04 and do not reproduce the same for the sake of brevity. Another aspect to be kept in mind is that the name of present assessee finds place in Table 7 and 8 of VCR and Table 7 refers actual expenditure and not projected expenditure. The plea of the assessee that the payment has made through normal banking channels does not help the case of assessee in view of discussion made in the paras above regarding the discrepancy in different communications.
Commission paid to Indian concern for liaison work was not allowed since the assessee failed to discharge its onus to establish that the said person had rendered any services to the assessee - Onus was upon the assessee to establish that the said persons had rendered services which necessitated the payment of commission to the said concern. Further, VCR in this regard reported that the persons making supplies to Iraq were indulging in payment of kickbacks stands established against the assessee and applying the said ratio, we uphold the disallowance made in the case of assessee relating to assessment years 2002-03 and 2003-04.
Eligibility to claim deduction under section 80IA allowed.
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2016 (10) TMI 1297
Disallowance of Freight expenses u/s. 40(a)(ia) - Scope of Amendment in section 40(a)(ia) - Tax not deposited before the end of the accounting year - HELD THAT:- Amendment in section 40(a)(ia) by Finance Act, 2010 has retrospective effect, meaning thereby, if the expenditure was incurred by the assessee in any month during the previous year and TDS was deducted, but such TDS was deposited after expiry of accounting year, but before due date of filing of the return, then disallowance under section 40(a)(ia) would not be made. DR was unable to controvert this contention of the ld.counsel for the assessee.
On due consideration of the facts and circumstances, we are of the view that as far as ground no.1 in all these three appeals are concerned, they are devoid of any merit, because, the assessee has deducted TDS on these amounts and TDS was deposited before the due date of filing of the return. AO has made disallowance on the ground that TDS was not deposited before the end of the accounting year i.e. before 31.3.2005. Therefore, ground no.1 in all three years is rejected.
TDS on the payments made to truck owners for hiring the trucks - Revenue authorities have assumed existence of either contractor-ship between the assessee and other truck owners, whose trucks were hired by the assessee for transport. There is no evidence on record. The assessee has ever entered into any contract or created any subcontract-ship with any of the truck owners.
Assessee could be fastened with the obligations to deduct TDS, if it has entered into a contract with truck owners. The assessee has only availed services of the contractor for transporting the goods from point “A” to “B”. All risk and reward for transporting the goods remain with the assessee. Therefore, the ld.Revenue authorities have failed to appreciate that relationship of contractor and contractee was not existed between the assessee and the alleged truck owners. On this reason, amongst other, we are of the view that the orders of the CIT(A) are not deserve to be interfered with, though by way of different reasons. e assessee cannot be held in default for non-deducting the TDS on the payments made to truck owners for hiring the trucks.
Section 40(a)(ia) was not applicable to the Asstt.Year 2005-06. Similarly, we have held that there is no contractor-contractee relationship exists between the assessee and the truck owners, therefore, no TDS is required to be deducted
Expenditure under the head car expenses and depreciation - CIT(A) confirmed the disallowance at the rate of 1/5th of this expenses - HELD THAT:- As agreed that decision of the Hon’ble Gujarat High Court in the case of Sayaji Iron & Engg. Co. [2001 (7) TMI 70 - GUJARAT HIGH COURT] is not applicable to the case of the assessee, as the assessee is a registered and firm and not a company. Since assessee failed to submit complete details, therefore, adhoc disallowance is made. We do not find any merit in this ground of appeal. It is rejected.
Disallowance in respect of bad debts - HELD THAT:- Revenue authorities have failed to appreciate the facts and circumstances. The explanation of the assessee was that it was given as advance to the staff for business purpose, i.e. it was to be incurred for hiring trucks. The ld.AO has considered as if it was given to the staff for their personal needs. The AO has considered it as advance to the staff. He has totally changed the meaning of the explanation of the assessee, and even if it is an advance to the staff during the course of employment and staff does not return it, then how it could be allowed as business loss, is not understandable. Similarly, the ld.CIT(A) has observed that the assessee failed to bring any evidence to demonstrate the fact that how it was incurred in day-to-day business activity. The assessee has submitted audited accounts and ledger accounts demonstrating the fact that the amount was given to the staff. What other evidence can be submitted ? Therefore, in our opinion, the ld.Revenue authorities have not appreciated the fact in right perspective. We allow this ground of appeal and delete disallowance.
Disallowance at the rate of 10% of the total expenses out of telephone and vehicle expenses, 20% on car expenses and depreciation on car and 15% on travelling expenses confirmed
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2016 (10) TMI 1296
TP Adjustment - comparable selection - grievance of the Revenue is that the Respondent Assessee had itself relied upon M/s. Megasoft Ltd., M/s. Software Technology Group International Ltd. and M/s. Transworld Infotech Ltd. as comparable for the Respondent Assessee's operations for the financial year 2005-06 - HELD THAT:- The requirement under Rule 10B(4) of the Income Tax Rules are clear in as much as it obliges that the data to be used for comparability analysis should be contemporaneous with the time when international transactions are entered into by the tested parties. In view of the clear mandate of the law, no question of estoppal can arise. Moreover, the provisions of Rule 10B(4) of the Act, being self evident, the question as proposed, does not give rise to any substantial question of law. Thus, not entertained.
Transfer Pricing Officer was referring to a financial year other than the subject financial year. Consequently, it could not be read as a comparable. Thus, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
Tested party is not functionally comparable to M/. Ultra Marine & Pigments Ltd. as it is engaged in rendering Engineering and Technical Services while the Respondent Assessee is engaged in routine customer support services. Thus, the two services are not comparable. The bench marking for the purposes of arriving at Arms Length Price (ALP) has necessarily to be done with companies functionally similar. Once the functional profile is different, then the resources to be used and the profits earned would inherently be different. The Revenue is not able to point out why this finding on facts by the Tribunal is perverse. Accordingly, this question also does not give rise to any substantial question of law
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2016 (10) TMI 1295
Business Auxiliary Services - providing multi level marketing to their principle they have provided services - time limitation - HELD THAT:- The issue of multi level marketing falling under the category of Business Auxiliary Services stands finally concluded by the Tribunal in the case of MR. CHARANJEET SINGH KHANUJA AND OTHERS VERSUS CST, INDORE/LUCKNOW/JAIPUR/LUDHIANA AND OTHERS [2015 (6) TMI 585 - CESTAT NEW DELHI]. However, it is seen that in the same very decision, the Tribunal has observed that since there was bonafide belief in the industry itself and in as much as two views stands held by the department itself regarding taxability of activity, longer period of limitation would not be available to the Revenue. We further note that in some of the cases, demands are wholly barred by limitation, whereas in some the same are partly barred. Further, in some cases, the entire demand is within limitation period.
Penalty - HELD THAT:- As there was bonafide belief in the industry itself, imposition of penalty would not be justified - penalty set aside.
Matter remanded to the original adjudicating authority to quantify the demands falling within the limitation period - appeal allowed by way of remand.
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2016 (10) TMI 1294
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- There is consistent view that in case there is no exempt income claimed by the assessee in the return of income, no disallowance can be made by the Revenue. Accordingly, in the present case, we confirm the order of the CIT (A) deleting the disallowance of expenses. Resultantly, this appeal of the Revenue stands dismissed.
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2016 (10) TMI 1293
Non-representation on the date of hearing by assessee - notice was sent to the assessee many times at the address indicated in Column No.10 in the memo of appeal, despite this the assessee remained unrepresented and notice came back unserved saying house is empty - HELD THAT:- On absence of any representation on the part of the assessee, it can be safely presumed that the assessee is not serious in pursuing the present appeal. The appeal of the assessee in view thereof is dismissed in limine. Support is drawn from the order of the Tribunals in Commissioner of Income-Tax vs. Multi Plan India (P) Ltd. [1991 (5) TMI 120 - ITAT DELHI-D] and Estate of Late Tukojirao Holkar vs. CWT [1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT]
Before parting it is appropriate to add that in case the assessee is able to show that there was a reasonable cause for non-representation on the date of hearing, it would be at liberty if so advised to pray for a recall of this order.
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2016 (10) TMI 1292
Termination of temporary licences awarded to the petitioner of on-board catering services - termination on the ground that the petitioner failed to start the catering service w.e.f. 21st September, 2016 and did not pay the security deposit and licence fee on or before 19th September, 2016 - HELD THAT:- This Court finds that since the petitioner had furnished its email address and the letters of Award dated 16th September, 2016 were communicated to the petitioner by way of email, which were admittedly received, the petitioner cannot complain of lack of communication of the three letters of Award. Consequently, it was possible for the petitioner to pay the licence fee on or before 19th September, 2016.
This Court also finds that the tender documents in the present instance itself clearly stipulated that in the event the licence fee was not paid in whole or part, the applicant would be debarred from participating in any bidding process for future projects of the respondent-IRCTC for a period of one year.
The plea for extension of time cannot be entertained as in the opinion of this Court, present proceedings cannot be used for renegotiation of contract and for fixing new dates for deposit of licence fee. In any event, if the respondent-IRCTC has wrongly debarred the petitioner, as claimed by the petitioner, then in the opinion of this Court, the petitioner would only be entitled for damages - this Court is in agreement with the contention of learned counsel for the petitioner that the punishment of debarment for a period of one year is not proportionate to the facts of the present case, especially keeping in view the fact that the petitioner has been an empanelled contractor/caterer with the Railways for more than ten years and is at the moment running five base kitchens.
The punishment of debarment of the petitioner in the peculiar facts of the present case is reduced to one month w.e.f. 28th September, 2016. The amount of ₹ 15,55,799/- deposited by the petitioner with regard to Patna Ranchi Jan Shadabdi shall be refunded to the petitioner within a period of one week - petition disposed off.
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2016 (10) TMI 1291
Degradation of environment on account of unauthorized construction on plot of land falling within CRZ - repair or renovation of dwelling units - whether contrary to the CRZ Policy document? - whether the structure as it existed when the Respondents moved the Tribunal complaining about violation within the CRZ area was the same structure as on 19th February, 1991 when the CRZ Policy came into being?
HELD THAT:- Any permission given contrary to those directions must be viewed as nullity and non-est, having been given in complete disregard of the directions of the High Court. Thus, the permission granted to the Appellant by GCZMA would be of no avail, as it is not consistent with the directions of the High Court.
The fact remains that the structure directed to be demolished by the Tribunal, was obviously erected after 19th February, 1991. That being an unauthorized structure within the meaning of Sub-clause (i) quoted above, could not be used for any purpose whatsoever and was required to be demolished. Therefore, the finding recorded by the Tribunal and the consequential directions given in that behalf are unassailable.
It is not necessary for us to dilate on the argument as to whether the CRZ Policy prohibits change of user of the structure which was in existence on 19th February, 1991, so as to be used as a Restaurant and Bar - no substantial question of law much less of great public importance arises for our consideration.
Appeal dismissed - decided against appellant.
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2016 (10) TMI 1290
Imposition of penalty u/s 114 of Customs Act on CHA - non-application of mind - vicarious liability - it is alleged that CHA have abetted in the fraudulent exports of the impugned goods effected/attempted by M/s. CMA Overseas - HELD THAT:- It is seen that the appeal can be disposed of on the short ground of non-application of mind by the adjudicating authority. The lack of diligence as well as the participative role ascribed to the appellant cannot be alienated from the licensee. While a partner can be proceeded against in his individual capacity for acts of omission and commission in relation to goods that are held liable for confiscation, the primary role of the Customs house agent, in relation to use of the licence issued to the agent, cannot be shifted to an individual, howsoever influential he or she may be in the licensed entity. The fastening of vicarious responsibility on the appellant is beyond the pale of law.
Imposition of penalty is a harsh measure to be invoked after due deliberation of the acts that have led to such offence as are clearly identified in the statute as penalizable. Section 114 has two facets which are to be invoked in mutually exclusive situations. That the adjudicating authority has failed to appreciate the distinction and has failed to invoke the particular provision taints his finding.
Appeal allowed - decided in favor of appellant.
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2016 (10) TMI 1289
CENVAT Credit - rent for office-cum-residence of Director - office-cum-guest house of the appellant - service of telephone installed - denial of credit on account that the appellant failed to establish that the said building is also being used as office - HELD THAT:- On perusal of the rent agreements produced by the appellant during the course of hearing, it is seen that the agreement was entered into in the name of the company and the purpose of hiring of residence-cum-office for the Directors and also guest house-cum-office for the appellant-company.
The denial of credit of service tax on these services and also on telephone services is not justifiable - appeal allowed - decided in favor of appellant.
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2016 (10) TMI 1288
CENVAT Credit - input services - house keeping services - HELD THAT:- The services availed comprised house-keeping activities like cleaning and washing the canteen, maintenance of drum plant, collecting papers and delivering to various sections, recording and sorting and conveyance hiring. None of the above activities are able to be demonstrated to be disintegrated to manufacturing activity carried out by the appellant. In absence of any cogent evidence to show that such services were not essential input.
Cleaning services for canteen - HELD THAT:- Cleaning Services availed for Canteen was to upkeep that under the Factories Act, 1948. Maintenance of drum plant was also an obligation to be discharged under Factories Act - appellant's claim of Cenvat credit does not appear to be unjustified.
Appeal allowed - decided in favor of appellant.
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2016 (10) TMI 1287
Depreciation to assessee trust - assessee is not engaged in any business - HELD THAT:- Depreciation on the asset in which the cost was already allowed as application of income under Section 11 of the Income Tax Act was considered by this Tribunal elaborately in the case of The Music Academy Madras [2016 (5) TMI 165 - ITAT CHENNAI] . This Tribunal found that Section 32 of the Income Tax Act is applicable only in respect of business of the assessee. Since admittedly the assessee is not engaged in any business and claiming itself carrying on the charitable activity, this Tribunal found that the assessee is not entitled for depreciation.
Conflict between the commercial principle or customary practice in computing income and the provisions of Section 32 were not brought to the notice of the Courts / Tribunal. Appeals of the assessee stand dismissed.
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2016 (10) TMI 1286
Deduction u/s 10A - direction of Hon’ble DRP to TPO/AO to reduce the telecommunication expenditure and the travelling expenditure incurred in connection with delivery of the software from both export turnover as well as total turnover - HELD THAT:- As decided in the case of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] once item is included in the export turnover, it should also be included in the total turnover.
Exclude the travelling expenditure and telephone expenses incurred in connection with the software products from both export turnover as well as total turnover. This direction is in consonance with the law laid down by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Tata Elxsi Ltd. [Supra] and therefore we do not find any reason to interfere with the findings of the learned CIT. Accordingly, we dismiss the grounds of appeal filed by the revenue.
Advances received from AEs as a part of payables for the purpose of computing the working capital adjustment - HELD THAT:- There is no dispute that the adjustment for working capital be granted. But the only issue is whether the advance received from AE should be considered as trade payable and be considered for working capital adjustment. The advance received from AE par takes the character of trade payables which is to be adjusted against the future invoice. As a result of receipt of this advance money the necessity for borrowings from outside is reduced to that extent thereby reducing the cost of the borrowings. Thus it has a direct bearing on the profitability of the concern. Therefore the trade payable should be considered while computing the working capital adjustment. Thus the grounds of appeal filed by the revenue are dismissed.
TP Adjustment - comparable selection - HELD THAT:- The assessee-company is engaged in providing software development services only to its AEs. Being a captive service centre providing contact services to its AEs, assumes less than normal risks and all the significant business and entrepreneurial risks are borne by the overseas affiliates , thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2016 (10) TMI 1285
Reopening of assessment u/s 147 - disallowance of depreciation - amount of deduction related to the entire previous year at the specified rates however, the assessee company had come into existence only with effect from 30.08.2003 and therefore,proportionately the deduction for the period prior to 30.08.2003 which comes to ₹ 32.39 Lakhs (round off) had to be disallowed - HELD THAT:- AO in the original order of assessment dated 28.12.2007 had after scrutinizing the return allowed depreciation of ₹ 89.92 Lakhs. Thus, this issue was accepted by the Assessing Officer during the original assessment proceedings, may be without specific queries and recording of reasons for accepting the full claim. Nevertheless, in view of the full disclosure by the assessee and the declaration made in the return itself, it cannot be said that the assessee had failed to disclose true and full material facts.
Claim towards subscription charges made - period for the expenditure was for 12 months, 11 months out of which pertained to subsequent year. Accordingly such expenditure could not have been claimed during the year under consideration in its entirety. Proportionately, therefore expenditure of ₹ 32,083/= had to be disallowed - HELD THAT:- In this respect, the assessee had in the return itself claimed such sum of ₹ 35,000/= by pointing out that the same was towards subscription charges for the period between 01.03.2004 to 28.02.2005. Here also thus, there was full disclosure on part of the assessee. If the assessing officer was of the opinion that a part of the claim did not fall within the relevant period; during the original assessment, he could have disallowed the same. Not having done so, reopening beyond a period of four years would not be permissible.
One – Deviyani Tex Chem had issued a debit note towards interest on late payment by the assessee company - These charges did not pertain to relevant period and therefore could not have been claimed in the present assessment year - HELD THAT:- The assessee had pointed out that alongwith the return of income, the assessee did produce a debit note. It was from this very note that the assessing officer was drawing an inference that the claim of expenditure which did not pertain to the year under consideration was made and there was clearly no failure on part of the assessee to disclose true and full facts.
Interest expenses did not fall during the year under consideration and was therefore, not allowable - HELD THAT:- In this case also, the assessee had not only shown full figures in the account, such issue was also examined by the assessing officer during the original assessment. Thus can be seen from the letter dated 05.01.2007 written by the assessing officer to the assessee under which he called for multiple details - not only had the assessee disclosed full facts, the claim was also examined by the assessing officer during the original assessment and he made no disallowances in the order of assessment. The fact that he did not assign any reason for the same would be of no consequence.
Legal and license fees charges - It pertains to an amount which the assessee had paid to the Director General of Foreign Trade by way of penalty - HELD THAT:- In response to such a query, the assessee had submitted ledger extract of legal and license fees which contained the details of payment of ₹ 1.10 Lakhs towards penalty for the license. Thus, the claim was processed by the assessing officer during the original assessment. Reopening of the assessment would not be permissible even with the aid of the explanation to Section 147 of the Act. The impugned notice is therefore set aside. The petition is allowed and disposed of.
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