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Showing 181 to 200 of 1398 Records
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2020 (10) TMI 1218
Addition on account of provision for dam maintenance - allowable expenditure - assessee follows mercantile system of accounting as per which liability for expenses can be recognized and claimed only when the liability crystallizes - HELD THAT:- CIT-A observed that though the expenditure have been incurred by the assessee for dam maintenance, it was kept under provision account for settlement with the government against amounts receivable from the Government - CIT(A) relying on the decision of this Bench of the Tribunal in assessee's own case allowed the provision for dam maintenance. - Decided against revenue.
Disallowance of depreciation - assessee did not produce the details of the assets on which depreciation has been claimed @ 25% - HELD THAT:- Assessee company appearing before the Ld. A.O. vide its written submission explained that the miscellaneous assets as aforesaid have been considered as plant and machinery and accordingly the depreciation as provided under the I.T. Rules for the plant and machinery have been claimed by the assessee on such assets - A.O. without appreciation the explanation and observing that in absence of the break up of details of such assets not being furnished has disallowed the claim of depreciation on such assets. In this connection, it is pertinent to state here that during the previous year i.e., relevant to the Asst. Year 2004-05, no disallowances as called for on these assets. Since presently the assessee has explained the particulars of assets and their classification under the head plant and machinery, the assessee company is entitled for depreciation as claimed. Under the circumstances the disallowance on this account are not sustainable on fact and law - Decided in favour of assessee.
Addition towards provision for guarantee commission - not an allowable expenditure - CIT(A) held that the claim of guarantee commission is in accordance with the business requirement and as such allowable - HELD THAT:- As per letter No. SG-21/07/3810/F dt. 29.1.2008 relating to the Dy. Accounting General (Commercial) from the Addl. Secretary to the Govt. of Odisha, the guarantee commission could not be reduced since the guarantee amount given by the Government of Odisha has not been reduced. The appellant is required to pay the guarantee commission on the maximum amount of guarantee irrespective of the loan outstanding as long as the guarantee amount itself has not been reduced. In view of the same, the claim of guarantee commission is in accordance with the business requirement and as such allowable. The addition made by the AO in this regard is deleted - Decided against revenue.
Provision for Leave Encashment - HELD THAT:- Hon'ble Calcutta High Court in the case of Exide Industries Ltd. Vs. Union of India, [2007 (6) TMI 175 - CALCUTTA HIGH COURT] the Hon'ble Calcutta High Court has struck down the provisions of Section 43B(f) of the Act as being arbitrary and unconscionable. Thereafter the Hon'ble Apex Court in case of Exide Industries Ltd. [2009 (5) TMI 894 - SC ORDER] has stayed the operation of the judgment of Hon'ble Calcutta High Court. Considering the above position, the Tribunal on the similar issue in case of Ernst and Young P. Ltd. [2015 (3) TMI 931 - ITAT KOLKATA] has restored the matter to the file of AO for fresh adjudication - Respectfully following the order of the Tribunal and we restore this issue to the file of AO to examine and allow the claim of the assessee and we allow this ground of appeal of the assessee for statistical purposes.
Non-disclosure of dues from DOWR - HELD THAT:- Assessee has already conceded to the addition made by the AO for which the CIT(A) has upheld the action of AO. Accordingly, we do not see any good reason to interfere with the findings recorded by the CIT(A) in this regard.
Prior Period Expenses - HELD THAT:- As decided in [2017 (9) TMI 1902 - ITAT CUTTACK] we restore the matter to the file of AO who shall examine the genuineness and crystallisation of the expenses in the financial year and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information.
Non-disclosure of interest on advance to contractor - HELD THAT:- Assessee during the course of hearing submitted that since the advance was given to contractor for capital construction by the assessee, therefore, the same deserves to be allowed. In view of the above, we restore the issue to the file of AO and direct the AO to examine the nature of advance as to whether it was given during the period of construction before commencement of commercial production of the assessee. If it is found that it was given during the construction period for the capital asset construction, the assessee's contention may be accepted. Accordingly, this ground of appeal of assessee is allowed for statistical purposes.
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2020 (10) TMI 1217
Transitional Credit - submission of declaration in Form GST TRAN-1 on 27th December, 2017 in time - vires of Articles 14, 265 and 300-A of the Constitution of India - HELD THAT:- In this case, we are not examining the issue whether the Petitioner is entitled to VAT tax credit as claimed by the Petitioner which will be examined by the authorities. What we are concerned with is that despite the admitted successful filing of Form TRAN-1 by the Petitioner on 27th December, 2017, the request of the Petitioner for transitioning of credit has not been approved by the ITGRC merely on the basis that there were no technical glitches on the GSTN side. There is no further explanation or clarification or evidence on the issue by the Respondents. Even the learned Sr. Counsel for the Respondents has only reiterated this stand during his submission.
The whole objective of digitization is to convenience the tax payers and not to harass them. We are conscious that the GST system is still evolving in its implementation. We are of the view that merely because there were no technical glitches in the GSTN with respect to the Petitioner’s TRAN-1 which was admittedly filed in time, the claim of the Petitioner, if it was otherwise eligible in law, cannot be rejected for no apparent fault on the part of the Petitioner. This cannot be the objective of the GST system or digitisation. Such a situation cannot be countenanced as it would be wholly unfair and unjust - this is a fit case for invocation of our writ jurisdiction.
The Respondents are directed to consider the case of the Petitioner and after looking into the merits of the claim and physically or otherwise verifying the amount of VAT as claimed by the Petitioner take such actions as may be necessary for transitioning the credit of such amount into the Petitioner’s credit ledger/ electronic credit ledger within four weeks from the date of this order.
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2020 (10) TMI 1216
Grant of regular bail - Sections 132(1)(b)(c) of the Punjab Goods and Service Tax Act - HELD THAT:- The criminal trial for the offences under Section 132 of the PGST Act, 2017 as also the arrest under Section 69 are without jurisdiction, having no backing of the constitutional provisions - The petitioner has been in custody for a period of 4 months and 14 day. The trial will take time to conclude, especially due to prevailing situation of Covid-19.
The moot question of law regarding the stage of initiation of prosecution under the Finance Act is involved; complaint is triable by a Magistrate; the petitioner is not required for further custodial investigation - Thus, the petition is allowed and the petitioner is ordered to be released on regular bail to the satisfaction of the learned trial Court/Duty Magistrate, subject to him furnishing bail/surety bonds.
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2020 (10) TMI 1215
Confiscation of vehicle along with the goods - owner/driver/person in charge of the goods conveyance Shri has not tendered any documents for the goods in movement - defective documents - E-Way bill not tendered - HELD THAT:- The writ applicant is engaged in the business of Tobacco etc. The writ applicant holds registration under the GST. The writ applicant received an order for supply of 14694 Kgs of Tobacco from a firm situated at Meghalaya running in the name of M/s. J.J. Exports & Imports.
A show-cause notice was issued to the writ applicant in Form GST MOV-10 calling upon the writ applicant to show-cause as to why the goods and the conveyance should not be confiscated under Section 130 of the GST Act, 2017. It appears that before the writ applicant could respond to the notice issued in Form GST MOV-10, the final order of confiscation in Form GST MOV-11 came to be passed on the very same date, i.e, 25th July, 2020 - It appears from the materials on record and the facts recorded above that no opportunity of hearing was given by the authority concerned to the writ applicant to meet with the notice issued in Form GST MOV-10.
The matter is remitted to the authority concerned for giving an opportunity of hearing to the writ applicant - Appeal allowed by way of remand.
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2020 (10) TMI 1214
Removal of Provisional attachment of Bank Accounts - Section 83 of the GST Act, 2017 - HELD THAT:- Section 83 talks about the opinion which is necessary to be formed for the purpose of protecting the interest of the government revenue. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But, at the same time, there must be material based on which alone the authority could form its opinion that it has become necessary to order provisional attachment of the goods or the bank account to protect the interest of the government revenue. The existence of relevant material is a precondition to the formation of opinion. The use of the word “may” indicates not only the discretion, but an obligation to consider that a necessity has arisen to pass an order of provisional attachment with a view to protect the interest of the government revenue. Therefore, the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. Such a course is impermissible in law.
In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith.
The order of provisional attachment of the five bank accounts of the writ applicant under Section 83 of the Act is quashed and set aside - Application allowed.
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2020 (10) TMI 1213
TP Adjustment - ALP of the guarantee commission charges provided by the Respondent Co. - Disallowance u/s 36(1)(iii) - acquisition of business by way of investing into shares of that company through either Special Purpose Vehicle or directly cannot be considered to be ordinary event of the business and therefore, cannot be termed as expenditure incurred for the purpose of assessee’s business, which is providing ITES services - HELD THAT: Special Leave Petitions are dismissed on the ground of delay.
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2020 (10) TMI 1212
Increase the professional fees for filing of income tax return of each companies under liquidation - HELD THAT:- Pursuant to the request letter dated 05.09.2020 to the Office of Official Liquidator regarding enhancement of professional fees for filing income tax return of various companies in liquidation from present rate i.e. ₹ 1300/- to ₹ 2500/- per company per assessment year, accordingly, learned advocate for the applicant has made a request to revise the professional fees.
Having heard submissions made by learned advocate Mr. Pathik Acharaya and after perusal of the order passed the Co- ordinate Bench on 03.05.2013, and having regard to provisions incorporated in Income Tax Act, prayer appears to be reasonable and deserves to be partly accepted.
Professional fees for filing income tax of each company in liquidation is fixed at ₹ 2000/-. Official Liquidator is permitted to make payment as per facts mentioned in para 4 to 6 of this report.
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2020 (10) TMI 1211
Disallowance u/s 14A read with Rule 8D - whether there is no exempt income received even if the investments have been made in the subsidiary company of the Assessee? - HELD THAT:- Tribunal found that the investments were made in by their assessee and this cannot be construed that investment is made for earning exempt income.
Tribunal rightly held that the provisions of Section 14A of the Act would not stand attracted. Therefore, the order passed by the Tribunal requires to be confirmed.- Decided in favour of assessee.
Section 43A Applicability - Assessee is acquiring the assets in India and in consequence of loan taken in Indian currency for acquisition of such asset which was converted into foreign currency loan increasing the liability as expressed in Indian Currency - HELD THAT:- Tribunal decided the said position against the Revenue in the assessee's own case [2020 (10) TMI 1164 - MADRAS HIGH COURT] - Decided in favour of assessee.
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2020 (10) TMI 1210
Computation of the ALP - Reason for selection by CASS (Computer Aided Search Selection) - approval of the PCIT for reference of the matter to the TPO - HELD THAT:- The petitioners’ submission to the effect that the reason for selection of scrutiny by CASS only involves a numerical reconciliation is, in our view an over simplification of the reason stated for selection. Perhaps the officer might have been more detailed in the choice of words employed so as to specifically refer to the issue of total employee cost. Non-reference to this is not fatal as the reason for selection by CASS has been produced and placed on record by the Officer while seeking approval of the PCIT for reference of the matter to the TPO.
After the expiry of the interim protection by this Court on 29.03.2019 the Assessing Officer has issued a show cause notice dated 11.10.2019 in response to which the petitioner has replied on 23.10.2019 enclosing various details on the computation of the ALP as sought for by the Officer. The affidavit filed in support of the writ petition however, is silent in regard to these facts. The petitioner has thus not only cooperated and participated in the conduct of assessment but has also filed objections before the DRP that are pending disposal. WP disamissed.
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2020 (10) TMI 1209
Capital gain computation - adoption of stamp duty value fixed by the DRO (Stamps) - section 50C applicability - Whether the stamp duty value/guideline value as on the date of presentation of the sale document for registration is relevant for the provisions of Section 50C and not the enhanced value determined under the Stamp Duty Laws subsequently? - HELD THAT:- Sub Registrar entertained the document for registration, did not accept the value computed at ₹ 400/- per square feet for the purpose of calculating the Stamp duty payable under the Indian Stamp Act on the said deed of conveyance, but determined the value of the property at ₹ 555/- per Square feet. Unfortunately, the Assessing Officer, while reopening the assessment, took note of this figure namely ₹ 555/- per square feet and recomputed the total sale consideration.
The recomputation of the total sale consideration based on the higher value fixed by the Sub Registrar is for the purposes of computing Stamp duty is wholly erroneous. - Decided in favour of assessee.
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2020 (10) TMI 1208
Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT:- It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020.
In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India.
The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders.
We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.
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2020 (10) TMI 1207
Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - Substantial Questions of Law framed for consideration on account of certain subsequent developments - Option to appeal in case application for settlement is rejected - HELD THAT:- It may not be necessary for this Court to decide the Substantial Questions of Law framed for consideration on account of certain subsequent developments. The Government of India enacted the Direct Tax Vivad Se Vishwas Act, 2020 (Act 3 of 2020) to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. The Act of the Parliament received the assent of the President on 17th March 2020 and published in the Gazette of India on 17th March 2020.
In terms of the said Act, the assessee has been given an option to put an end to the tax disputes, which may be pending at different levels either before the First Appellate Authority or before the Tribunal or before the High Court or before the Hon'ble Supreme Court of India.
The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration to be filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a Miscellaneous Petition for Restoration, the Registry shall place such petition before the Division Bench for orders.
We direct the appellant / assessee to file the Form No.I on or before 09.11.2020 and the competent authority shall process the application / declaration in accordance with the Act and pass appropriate orders as expeditiously as possible preferably within a period of six (6) weeks from the date on which the declaration is filed in the proper form.
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2020 (10) TMI 1206
Revision u/s 263 - order of reassessment proceedings cannot be treated as prejudicial to the interest of revenue - HELD THAT:- No question of law arising in the present appeals by the Revenue, as the learned Tribunal has clearly noted in its impugned order quoted above that the above capital gains have already been subjected to tax in the subsequent assessment years AY 1988-1999 to 2000-2001. He submitted that for the present assessment year AY 1997-98, even though the Assessing Authority himself has accepted that there were no transfer of land in the Joint Venture Agreement for development of the property had taken place in this AY 1997-98, still by resorting to Section 263, it cannot be said to be prejudicial to the interests of Revenue, as held by the learned Commissioner, which has been rightly set aside by the learned Tribunal by the impugned order and therefore, no question of law arises.
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2020 (10) TMI 1205
Taxation of intermediary services - taxable as ‘fees for technical services’ - appellant company is registered and incorporated under the laws of Sweden and is a non-resident and tax resident of Sweden - CIT-A observed that the said intermediary services rendered by the appellant to BTIN does not satisfy the ‘Make Available’ clause and does not amount to FTS - HELD THAT:- Technical or consultancy services rendered should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider.
Technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology.
Provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service. In our considered view, payment of consideration would be regarded as 'fee for technical/included services' only if the twin test of rendering services and making technical knowledge available at the same time is satisfied. For this, we derive support from the decision of De Beers India Minerals Private Limited [2012 (5) TMI 191 - KARNATAKA HIGH COURT]
Intermediary services rendered by the appellant do not make available any technical knowledge, skill etc to BTIN and BTIN is not a equipped to apply technology contained in services rendered by the appellant. Therefore, the intermediary services provided by the appellant to BTIN do not tantamount to FTS and accordingly, shall not be taxable in India. Accordingly, Ground Nos. is 4 to 6 taken together, are allowed.
Existence of Permanent Establishment [PE] - DRP has enhanced the income of the appellant on account of PE in India - HELD THAT:- The undisputed fact is that the supplies made under the BS-02 agreement were off shore supplies - In the case of Ishikawajima Harima Heavy Industries Ltd [2007 (1) TMI 91 - SUPREME COURT] has categorically held that only such part of the income as is attributable to the operations carried out in India can be taxed in India. Same view was taken in the case of Nortel Networks India International Inc & Ors [2016 (5) TMI 373 - DELHI HIGH COURT].
Appellant does not have any place of business in India and all business activities with respect to offshore supplies are carried outside India. The equipment supply has been manufactured at overseas manufacturing facility of the appellant and sale of equipment has occurred outside India and payment has also been received by the appellant and outside India.
DRP was misdirected in considering the contract RS 02. This contract is between BTIN Bombardier Transportation, Germany and DMRC and for this contract, Bombardier Transportation Germany has raised invoices on BTIN for offshore manufacture and supply of equipment whereas the contract under consideration is between DMRC and Consortium the appellant and BTIN towards offshore supply train control and signalling equipment - Entire findings of the DRP are based on erroneous appreciation of wrong facts and on such erroneous appreciation of wrong facts, the DRP held that BTIN is the PE of the appellant in India without appreciating the true facts that the appellant has no place of disposal in India in the office of BTIN from where the appellant could have conducted its business in India.
Once the return of income is selected for scrutiny assessment the Assessing Officer calls for hard copy of the return along with computation of income - no AO could proceed in another assessment proceeding without looking into the returned income qua its computation.
As TPO has examined the international transactions and has accepted the same to be at ALP, we do not find any merit the additions made by the DRP. We accordingly, direct the Assessing Officer to delete the addition of income attributable to PE - Decided in favour of assessee.
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2020 (10) TMI 1204
Unexplained cash credit u/s 68 - professional fees received - HELD THAT:- Action of the AO in treating the sum shown as income in the form of professional fees received as unexplained credit u/s. 68 of the Act cannot be sustained. There is no dispute with regard to the identity and capacity of VHPL. The genuineness of the transaction cannot be disputed merely on the basis that no services were rendered. The basic presumption u/s. 68 is that the sum treated as unexplained has to be assessee’s money. TDS has been deducted on the sum payable by VHPL. The AO himself has found that VHPL does not have employees and assessee catered to the needs of VHPL. In these circumstances, the addition of ₹ 6 lakhs u/s. 68 was not justified.
Disallowance of expenses - Rental expenditure treated as unexplained expenditure u/s. 69C - HELD THAT:- The assessee has explained that apart from the rent for godown of the previous year, which was allowed by the AO at ₹ 15,600, the balance amount of ₹ 2,11,542 was rent paid to accommodation provided to the assessee’s director. This fact is evidenced in the Notes to the Accounts at Point No.9. In these circumstances, the addition u/s. 69C of the Act was not justified.
Disallowance of depreciation is use of BMW car by the director of assessee - HELD THAT:- There is use of car by director of company for the purpose of business of assessee and this is not disputed. There is nothing to show that property was used only for personal purposes. The car in question was a business asset and depreciation had to be allowed on the same. The AO could have disallowed depreciation on the ground of personal user in respect of a particular item of depreciable asset. He could not have disallowed the entire claim of depreciation. Disallowance of depreciation on the ground that there was no business activity, cannot also be sustained, for the reasons which will be given later.
Employee cost was salary paid to 3 employees and had to be allowed as a deduction - no dispute that salary was paid to employees of the assessee. No valid justification for the comments and conclusions of AO in the order of assessment which was endorsed by the CIT(Appeals).
Whether lack of business activity can result in disallowance of expenses incurred by the assessee? - HELD THAT:- Business of assessee had not come to a complete halt and it was a going concern and expenses in question had to be incurred to keep the concern going. We are therefore of the view that the expenses in question should be allowed as a deduction.
Tribunal in the appeal of the revenue for AY 2009-10, on the aforesaid reasoning had upheld the order of CIT(Appeals) deleting the addition made by AO by way of disallowance of expenses. We are therefore of the view that the expenses claimed by the assessee should be allowed as a deduction and it has also to be held that income of ₹ 6 lakhs has to be regarded as operating business income.
Disallowance of expenses u/s. 14A - HELD THAT:- Disallowance u/s.14A as made by the assessee in computation of income has already been subsumed in total income declared by the assessee.
Since the total income of assessee has been computed by the AO in the order of Assessment with the starting point as loss declared by the assessee in the return of income, which also includes disallowance u/s. 14A, there was no occasion to further make a disallowance u/s. 14A.
Disallowance made by the assessee is greater than the disallowance made by the AO. In these circumstances, we hold that no separate disallowance u/s. 14A is warranted in the facts and circumstances of the present case.
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2020 (10) TMI 1203
Assessment u/s 153A - incriminating material found during search or not - HELD THAT:- Without there being a clear finding in respect of their being incriminating material/unaccounted money unearthed during the course of search, validity of assessment order passed under section 153A cannot be ascertained. Hence we feel it proper to remand the issue back to Ld.CIT(A) for fresh consideration on this aspect about validity of invocation of section 153A in the light of decision of CIT vs Sinhagd Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] - In the event assessee succeeds on this aspect then nothing remains to be decided on merits. But if assessee fails on this aspect, then the issue on merits should be decided by Ld.CIT(A) afresh, in accordance with law.
CIT(A) remanded certain issues to Ld.AO to consider in accordance with law. In our opinion after the amendment to section 251, Ld.CIT(A) cannot remand any issue to Ld.AO and has to decide it himself. Hence we set aside the orders of Ld.CIT(A) in both the years under consideration and remand entire issues alleged by assessee, with a clear direction that, he should 1st decide the legal ground raised by assessee as indicated hereinabove and thereafter decide the issue on merits if assessee fails in the legal ground.
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2020 (10) TMI 1202
Disallowance u/s 14A r.w.r. 8D - CIT(A) deleting the disallowance - HELD THAT:- CIT(A) has decided the issue on the basis of the decision of Hon’ble ITAT in the assessee’s own case for the A.Y. 2012-13 & 2013-14. It is specifically mentioned that the AO had recorded the similar reason while disallowing the expenditure to earn the exempt income in all the three years. The assessee filed an appeal before the CIT(A) who confirmed the order of the AO but the assessee filed an appeal before the Hon’ble ITAT in which the expenditure was restricted to the extent of expenditure which has been declared by assessee. CIT(A) has reproduced the judgment of the Hon’ble ITAT in his order. The CIT(A) has also discussed the several law including the India Advantage Securities Ltd [2015 (6) TMI 140 - BOMBAY HIGH COURT] and Maxopp Investment Ltd. [2018 (3) TMI 805 - SUPREME COURT]
The facts are not distinguishable at this stage.
Needless to say that the AO nowhere recorded the satisfaction to arrive at this conclusion of reasonable expenditure incurred to earn the exempt income. No books of accounts were examined in this regard. We nowhere found any illegality and infirmity in the order passed by the CIT(A) in question. - Decided against assessee.
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2020 (10) TMI 1201
Revision u/s 263 - prohibition by law within the meaning of Explanation 1 to Sec.37(1) on claiming sales promotion expenses as deduction u/s.37(1) - providing freebies by pharmaceutical companies is a natural corollary violation of the provisions of MCI Regulations, 2002 - HELD THAT:- When the order passed by the Pr.CIT-2, Mumbai, under Sec. 263 of the Act, dated 31.03.2017 had been quashed by the Tribunal, and thus, is no more in existence, therefore, the consequential assessment framed by the A.O under Sec.143(3) r.w.s 263 cannot be sustained and has to meet the same fate. In the backdrop of our aforesaid deliberations, we herein, finding no infirmity in the view taken by the CIT(A) who in our considered opinion had rightly vacated the assessment framed by the A.O under Sec.143(3) r.w.s 263, dated 29.09.2017, therefore, uphold his order. The Ground of appeal No.1 filed by the revenue is dismissed.
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2020 (10) TMI 1200
Exemption u/s 10A - As per AO assessee has bifurcated the expenditure against the domestic income as well as export income AND profit from domestic sale does not qualify either adjustment of loss from export business u/s 10A - assessee explained that it has entered into a Master Outsourcing Agreement with C&S, USA to provide ITES and also entered into an agreement called Master Outsourcing Agreement with GHCL - CIT-A allowed deduction - HELD THAT:- Provisions of section 10A(4) of the Act have been explained elsewhere. In our understanding of the present facts and law, as both the export sales and domestic sales were done by the same undertaking, therefore, profit or loss of the undertaking needs to be calculated as a whole and profit from domestic sales cannot be charged separately to tax and adjusted against loss from export business in the present case. We, therefore, do not find any error or infirmity in the findings of the CIT(A). - Decided against revenue.
Staff travel foreign expenses - assessee was required to give nexus between travelling expenses incurred and business receipts as a whole and the designation of the employees who made the travelling - HELD THAT:- As the company is in export of call centre services, setting up a successful international call centre requires up-to-date technology, quality assurance, data analysis and continuous training of employees, international level of communication, skills, continuous business development and for this purpose, the top management and the other related employees went abroad to gain knowledge of the call centres to have international standards. As mentioned elsewhere, this is the first year of the business. Therefore, it is more important for the appellant company to update its key employees with advanced technology. - Decided against revenue.
Legal and Professional Expenses - AO formed a belief that the assessee has claimed expenditure under this head, which does not have any business nexus, and purpose for payment of legal and professional expenses are not justified - HELD THAT:- Assessing Officer fell into error in holding that the expenditure under this head does not have any business nexus. As mentioned in the earlier ground that the Assessing Officer should not decide which expenses are necessary for the purpose of carrying on the business and it is for the business-man to decide. Moreover, legal and professional expenses are paid to professionals for their legal and commercial advice which are necessary for carrying on business.
As the genuineness of the expenses have not been questioned and the Assessing Officer has merely questioned the legitimacy of the expenses which, in our opinion, is not correct. It is for the business- man to decide which expenses are necessary to further its business.- Decided against revenue.
TP Adjustment - unutilised capacity - alternative TP study done by the assessee - HELD THAT:- As total available man hours for calling during the year was 1,93,440 and total billed hours were 1,01,851/-. Thus, the idle hours of calls 91,589 which makes unutilised capacity at 47.35%. In the subsequent years, capacity utilisation has been increased from 50% to 100%. We, therefore, do not find any infirmity in deciding this issue on unutilised capacity by the CIT(A).
Alternative TP study done by the assessee fulfils the requirements of TP regulations and is found to be correct. OP/TC with C&S USA is 11.20% which is more than the average OP/TP of the comparable companies at minus 6.89%. Assuming that the OP/TC of the comparable companies as per the TPO is correct, which is at 9.52%, the assessee’s OP/TC being 11.20%, we are of the considered view that the international transaction is at ALP and needs no further adjustment and accordingly, no interference is called for in the findings of the CIT(A) - Decided against revenue.
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2020 (10) TMI 1199
Income declared in the survey carried out u/s 133A - Disallowance of salary to partners claimed u/s.40(b) - income declared in the survey and also offered for taxation - whether the income offered by the assessee is covered u/ss 69/69A of the Act as held by the AO or can be classified as `Business income’ as claimed by the assessee? - HELD THAT:- Amount of investment is only a measure for quantifying the amount of addition. Raison d’etre for the addition is not giving any satisfactory explanation about the source of income, which was used for investment. If source is explained, there can be no addition on account of investment.
We are confronted with a situation, in which both the source and destination are business inasmuch as the source of the income is business and the destination of such income is again in the nature of business assets, that is, stock, cash and receivables.
As a fortiori, such an income will be considered as `Business income’ covered under Chapter IV-D of the Act forming part of book-profit for the purposes of allowing remuneration to partners.
As the assessee offered ₹ 50,25,997/- in the return of income by treating the same as part of business profit, in our view, the AO was obliged to consider it the same way at the time of computation of “book profit” by allowing claim of remuneration etc. We, therefore, overturn the impugned order and restore the assessee’s calculation of remuneration to partners etc. - Decided in favour of assessee.
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