9911796707
TMI Blog2015 (12) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... It is noted from the order of the DRP that no findings have been given with regard to the objections made by the assessee with respect to selection of comparables by the TPO. No proper decision has been given by the DRP on the merits of the case also. Therefore, in our considered opinion, this ground needs to go back to the file of the DRP to re-adjudicate the same - Decided in favour of assessee for statistical purposes. Rental income from leased properties - AO taxing as as profit and gains of business or profession instead of income from house property - Held that:- As relying upon assessee's own case [2010 (6) TMI 433 - Bombay High Court ] held that Rental income received by the assessee-company from sub-leasing of commercial premises is to be considered as Income from house property even though the renting out of the premises amounts to commercial exploitation for business purposes by the assessee-company - Decided in favour of assessee TDS u/s 194C - disallowance u/s.40(a)(ia) - non deduction of TDS on payments made to manufactures towards purchase of finished goods - Held that:- The purchases have been made by the assessee from manufacturer/suppliers on principal to principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecasted the amount of income accrued to it by way of aforesaid capital gains. The legislature has taken care of this situation by inserting a proviso below section 234C(1)(b).There is no dispute on the fact that the exact estimate could not be done by the assessee on the amount of capital gains. The assessee has relied upon the judgment of Hon’ble Rajasthan High Court in the case of CIT vs. Smt. Premlata Jalani (2003 (7) TMI 62 - RAJASTHAN High Court ), wherein held interest is chargeable on delayed or deferred payment of advance tax, it shall be payable only with effect from the date the liability to pay advance tax in respect thereof has been incurred. There cannot be any interest prior to the date in respect of such liability when there was no liability to pay advance tax under any provisions of the Act. Interest has been levied ignoring the effect of aforesaid proviso as well as judgment therefore in the interest of justice, we send this issue back to the file of the AO to decide the same in terms of our directions as contained above - Decided in favour of assessee for statistical purposes. Interest income granted u/s 244A - Held that:- interest income u/s 244A has been done in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Held that:- This issue has been thrashed out by the Hon’ble Pune Bench in the case of iGATE Computer System Ltd. (supra), wherein it has been held that once the transaction between the assessee and its AEs was in foreign currency, then the same partakes the nature of international transaction and the said transaction has to be looked upon by applying the commercial principles with regard to an international transaction. If that is so, then the domestic lending rates cannot be applied in order to benchmark the transaction of the assessee with its AEs and the international rates fixed by LIBOR would come into place. As no serious objections have been raised by the Ld. CIT-DR for adoption of international rates fixed by LIBOR, keeping in view the fact that amount was to be received back in US currency only. Thus, we hold that Indian prime lending rates cannot be applied and the international rate fixed by the LIBOR would come into play. In our considered view, as per as per the suggestions received from both the sides, the rate of interest should be LIBOR plus 150 basis points. Period up to which adjustment on account of interest can be made to the income to the current year - Held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessee Addition made by the AO on account of mismatch of individual transaction statement transactions with insurance companies - Held that:- The primary onus is upon shoulders of the AO to show that the transactions reported in AIR belong to the assessee. It is only thereafter, the onus of the assessee shall start to show that these transactions have been duly recorded in the books of account of the assessee, failing which the addition may be liable to be made. With these directions, this issue is sent back to the file of the AO with further directions to grant adequate opportunity of hearing to the assessee. The assessee shall also extend requisite cooperation to the AO. - Decided in favour of assessee for statistical purposes. Addition on account of some differences on the basis of AIR information and on account of mismatch with From 26 - Held that:- Our prima facie view is that the addition has been made and sustained by the lower authorities by following a casual and irresponsible approach. The assesse has submitted complete information showing proper reconciliation. These have been either ignored or not properly appreciated by the lower authorities. Both of these grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutions/ hospitals/ doctors, who actually perform the clinical trials under the instructions of Pfizer Inc. 3.2. The other vital facts are that the assessee company is earning assured return by adding 10% mark-up on the total cost and it has characterized itself as a low risk support service provider. Following comparison has been furnished with respect to assessee's comparables vis-a-vis TPO's comparables: As per TP study Report OP/TC Using March 2007 data As per TPO OP/TC Nature of business Agrima consultants International Ltd. -2.42% 1.39% Engaged in providing business support services and assistance in feasibility study of projects. Cyber media events Ltd. 2.33% 8.73% Engaged in organizing conferences, exhibitions & Seminars and specially events. Hindustan Housing Co. Ltd. 10.33% 9.57% Engaged in rendering administrative and allied services Subex Azure Ltd. -1.11% 12.43% Engaged in providing staff augmentation to telecom companies in USA Alphageo(India) Ltd. 38.50% Engages in seismic survey and other reated activities. Choksi Laboratories Limited 33.76% Commercial testing house which is engaged in testing of products. N.G. Industre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as prescribed in the Proviso to Section 92C(2) of the Act. 3.4. The assessee has relied on the decision of Mumbai Bench of the Tribunal in the case of Zydus Altana Healthcare Pvt. Ltd, wherein activity in the nature of coordinating / facilitating clinical trials carried out by various hospitals rather than performing the R & D functions itself, for a return of 5% on cost, was accepted at arm's length. 3.5. The DRP rejected the submissions of the assessee and upheld the adjustment made by the TPO (Transfer Pricing Officer). 3.6. But, while deciding this issue, the DRP has not given detailed reasoning to arrive at its conclusion. The real issues raised by the assessee in detailed submissions filed before the DRP have not been dealt with properly. It appears that the DRP could not properly appreciate the facts of the case and issues involved therein. It has been pointed out by the Ld. Counsel that some incorrect facts have been noted by the DRP in its order. It has been mentioned by the DRP that the assessee had sole right to decide investigator, whereas as per Ld. Counsel, the correct facts are that the assessee company has right to only monitor the progress of the investigator. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of lower authorities. The relevant facts as culled out from the orders are that in its Profit & Loss Account, the assessee had credited a sum of ₹ 5,98,81,000/- being rental income from sub-leasing of office premises situated at Express Towers, Nariman Point, Mumbai, which was owned by the Indian Express Group. The assessee company reduced the said rental income of ₹ 5,98,81,000/- from its income under the head "Income from Business & Profession" and shown the same under the head "Income from House Property" and taxed it accordingly. The Assessing Officer felt that assessee company was not the owner of the premises, and therefore he asked the assessee to show cause as to why the rental receipts should not be treated as its income under the head "Income from Business & Profession" and be taxed accordingly, for the reasons discussed in detail in the assessment order for the immediately preceding year i.e. A.Y. 2006-07 and years prior thereto. The assessee company, vide its written submissions dated 06.09.2010, stated that the Indian Expression Group has granted irrevocable permission to the assessee to sub-lease the said leased premises, upon such terms and conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.4 is allowed. 7. Ground No.5 is not pressed by the Ld. Counsel. Accordingly, it is dismissed. 8. Ground No.6: In this ground the assessee has challenged the action of Ld. AO and the DRP in making the disallowance u/s.40(a)(ia) of the Act, being the payments made to manufactures towards purchase of finished goods amounting to ₹ 43,70,60,000/- on the ground that the contract with the concerned manufactures were 'works contract' and not 'contract for sale', and accordingly these were liable for deduction of tax at source under the provisions of section 194C of the Act. 8.1. The brief facts are that during the year under consideration, the assessee made payments to the third party manufacturers for purchase of finished goods amounting to ₹ 9166.75 lacs and for purchase of packaging material amounting to ₹ 4370.60 lacs. The assessee made the said payments without deduction of tax at source considering that the payments were made for contract of 'sale of goods' and hence, not liable for deduction of tax at source. The AO, however, contended that the payment for purchase of finished goods and packing materials constitutes contractual payments and hence, liable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of term "Work", an exclusion has been made providing that, "work" does not include manufacturing or supplying a product according to the requirement or specification of the customers by using material purchased from a person, other than customer. Ld. Counsel submitted that there was ongoing litigation on this issue and therefore, aforesaid amendment has been made to section 194C for the purpose of bringing out clarity on this issue, in favour of the assessee. Further, reliance has been placed on the circular of CBDT, No. 681 dated 8th March 1984, wherein it has been provided that provisions of section 194C would not be applicable in case of contract for sale of goods. Lastly, it was submitted that the most important aspect is that for the aforesaid failure of assessee for deduction of tax, an order was passed u/s 201 holding the assessee in default for failure to deduct TDS at source. The matter has reached up to ITAT, wherein the Tribunal vide order 31.10.2012 has held that the assessee was not liable to deduct tax at source on the purchase of finished goods and packing materials. 8.5. On the other hand, Ld. DR has supported the order of lower authorities. 8.6. We have g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he invoice, TDS shall be deducted on the whole of the invoice value." 8.8. The perusal of this explanatory statement clarifies that intention of the legislature for bringing out this amendment was to avoid unintended consequences which the taxpayers were facing as a result of wrong application of pre-amended section 194C. The Legislature wanted to remove the hardships faced by the assessee in such cases. There was no intention of the legislature for deduction of tax at source in the cases of transactions of pure sale and purchase. Therefore, to remove this anomaly, this amendment was brought out, for the benefit of the assessee. Thus, in our view, the aforesaid amendment made in the definition of term "works", in section 194C is clarificatory in nature, and therefore, assessee should get its benefit in assessment year 2007-08 also. 8.9. The facts of the present case are that, it is not the case of AO or DRP that material was supplied by the assessee. The purchases have been made by the assessee from manufacturer/suppliers on principal to principal basis. The manufacturers/suppliers had also levied excise duty or sales tax or VAT, as was applicable. As per the terms of the agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the agreement to sell dated 1st September 2006, an amount of ₹ 2,72,98,00,000/- was allocated towards the Chandigarh land out of the aforesaid total consideration. In respect of the aforesaid land at Chandigarh, the assessee had obtained a Valuation report dated 30th May 2006, from a Government Registered Valuer, M/s Amol Sekhri & Associates, which determined the FMV of the land as on 1 April 1981 at ₹ 12,54,52,800/- In the Return of Income, the assessee had offered long term capital gains of ₹ 2,02,64,67,043/- on sale of land at Chandigarh. 9.2. The Assessing Officer referred the valuation of the Chandigarh Land to the DVO, Chandigarh under Section 55A of the Act. Pursuant to the same, the DVO issued a valuation report dated 27 December 2010 determining the FMV of the Chandigarh Land at ₹ 36,974,000/-. Further, the AO during the course of assessment proceedings asked the assessee to show cause as to why the FMV as on 1 April 1981 determined by the DVO should not be adopted for the purpose of computing capital gains on sale of Chandigarh Land. In response to the same, the assessee objected for adoption of DVO's report and also submitted its objections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 55A(b) has no application, and further if the value determined by the DVO is lower that than claimed by the assessee, then the reference to the DVO is not valid. 9.8. Our attention was also invited to the following decisions which have decided the same principle with regards to the applicability of section 55A(a) vis-a-vis section 55A(b): (a) Hiaben Jayantilal Shah v Income-tax Officer (Gui HC) (310 ITR 31) b) Ms. Rubab M. Kazerani v Joint Commissioner of Income-tax 97 TTJ 698 (Mum) c) Income-tax Officer vs Smt. Lalitaben Kapadia (115 TTJ 938) (Mum) (d) Smt. Sarla N. Sakraney v Income-tax Officer (Mum) (e) Sajjankumar M. Harlalka v Joint Commissioner of Incometax (102 TTJ 974) (Mum) (f) Smt. Krishnabai Tingre v Income-tax Officer (101 lTD 317) (Pune) 9.9. On the other hand Ld. CIT (DR) has vehemently opposed the arguments of the Ld. Counsel. He has supported the action of AO in making reference to the DVO. It has been argued by him that reference has been made by Ld. DVO u/s 55A(b)(ii) and not in section 55(A(a), he placed reliance upon Board's circular No.96 dated 25.11.1972. As per Ld. DR, the AO has all the powers under the law i.e. whether the fair market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment is reproduced below: "We find that Section 55A(a) of the Act very clearly at the relevant time provided that a reference could be made to the Departmental Valuation Officer only when the value adopted by the assessee was less than the fair market value. In the present case, it is an undisputed position that the value adopted by the respondent-assessee of the property at ₹ 35.99 Iakhs was much more than the fair market value of ₹ 6.68 lakhs even as determined by the Departmental Valuation Officer. In fact, the Assessing Officer referred the issue of valuation to the Departmental Valuation Officer only because in his view the valuation of the property as on 1981 as made by respondent-assessee was higher than the fair market value, In the aforesaid circumstances, the invocation of Section 55A (a) of the Act is not justified. The contention of the revenue that in view of the amendment to Section 55A(a) of the Act in 2012 by which the words "is less than the fair market value" is substituted by the words " "is at variance with its fair market value" is clarifactory and could be given retrospective effect. This submission is in face of the fact that the 2012 amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso compared it with the detailed arguments made by Ld. CIT-DR. It is noted by us that Hon'ble Jurisdictional High Court has also considered the amendment made under the law and held that the same is prospective and not retrospective in nature, and therefore, Revenue cannot be given the benefit of amendment. It has been further held by the Jurisdictional High Court that in all those cases which are covered by section 55A(a), resort cannot be made to the residuary clause provided in section 55A(b)(ii). In other words, reference u/s 55A(b)(ii) can be made only in those cases which are not covered by this section 55A(a). It is noted by us that clause (a) covers those cases where the value of asset is adopted by the assessee on the basis of report of registered valuer. 9.14. The present case is clearly covered under clause (a), since the assessee had adopted the value of the impugned land as on 01.04.1981 on the basis of report of registered valuer. Thus, under such circumstances invocation of clause (b)(ii) of section 55A was ousted, and therefore, reference could have been made by the AO u/s 55A (a), only. 9.15. Ld CIT DR argued that in this case reference was made by the AO u/s 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted by the Ld. Counsel that the assessee had transactions of more than ₹ 25 crores with the M/s Emcure Pharmaceuticals, and the assessee was able to reconcile majority of the transaction with its books of accounts, but only a miniscule amount of ₹ 26,779/- could not be reconciled, and consequently the same was added by the AO. 11.1. We have gone through the material placed before us and the submissions made by the assessee. It is noted that no specific arguments were made, nor anything has been shown that this difference was duly reconciled. In view of the above, Ground No.10 is rejected. 12. Ground No.11: In this ground the assessee has challenged the action of Ld. AO in levying interest u/s 234C of the Act amounting to ₹ 2,11,33,619/-, by ignoring the proviso below section 234C(1)(b). It has been submitted that the assessee had sold property at Chandigarh on 16th March 2007, and accordingly, the capital gains had arisen after due date of payment of installment of advance tax. The assessee has paid the entire tax in respect of the long term capital gain arising on the sale of aforesaid property, amounting to ₹ 46 crores on 31st March 2007. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to AY 2005-06, the appellant had received an 'intimation dated 30 March 2004 issued under section 143(1)(a) of the Act, wherein interest under section 244A amounting to ₹ 1,87,81,254 was granted for AY 2003-04 (refer compilation page no 132). The said interest income was credited to the Profit and Loss Account for the said year. 2. In the return of income for AY 2005-06, the said interest was not offered to tax on the ground that a notice under section 143(2) of the Act had already been issued and the assessment proceedings for AY 2003-04 had not been finalized. 3. An order under section 143(3) of the Act was passed on 31 March 2006 for AY 2003-04 wherein interest under section 244A of the Act was recomputed at ₹ 1,18,75,551. The said amount was offered to tax in the return of income for A.Y. 2007-08 and has been taxed in the assessment order (sr. No. 2 on page 23 of the draft assessment order). 4 Subsequently, vide order dated 10 March 2011 giving effect to the order passed by the Commissioner of Income-tax-(Appeals) ['CIT(A)] for AY 2003-04, interest under section 244A of the Act has been recomputed at ₹ 1,29,50,156/-. 5. A notice dated 26 March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax in the return of income for A.Y.2007-08 and taxed as such in the assessment order dated 21.10.2011, ought not to taxed in A.Y.2007-08. 13.3. On the other hand, Ld. CIT- DR has supported the orders of lower authorities. With respect to admission of the additional ground, no serious objection was raised by him. 13.4. We have gone through the submissions made by both the sides and copies of orders shown to us. In our considered view, the ground raised by the assessee is purely legal ground, and it can be decided on the basis of facts already held on records. Therefore, in view of judgment of Hon'ble Supreme Court, the additional ground is admitted. 13.5. We find that assessment of the interest income u/s 244A has been done in such a manner that it has led to double taxation, as on date. We feel that the role of the income tax authorities, under the law, is to make fair assessment of income and determine tax payable thereon. No tax can be collected except with the authority of law, as per clear mandate of our Constitution, as enshrined in article 265. The law does not intend to make unjust enrichment of the Government, at the cost of taxpayers. Therefore, in the interest of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfair assessment of income in the hands of the assessee. Therefore, we direct the AO to adopt the value of closing stock of A.Y. 2006-07 as value of opening stock of assessment year 2007-08, in case the addition made by the AO in the closing stock of A.Y.2006-07 has attained finality. Accordingly, this ground is sent back to the file of the AO with the directions as given above, and may be treated as allowed for statistical purposes. 15. Ground no.14: This Ground is not pressed by the assessee, and therefore dismissed. 16. Ground no.15 (Additional Ground): In this ground, the assessee has sought direction to be issued for granting 1/5th of the expenses amounting to ₹ 13,06,200/- related to merger of Pharmacia Healthcare Limited with Pfizer Limited, as per the provisions of section 35DD of the Act. 16.1. It has been argued that 1/5th of expenditure incurred in relation to amalgamation of Pharmacia Healthcare Limited with Pfizer Limited in A.Y. 2004-05 amounting to ₹ 13,06,200/- was allowed as deduction in A.Y. 2004-05 in accordance with the provisions of section 35DD of the Act, and therefore, consequently, to maintain consistency, similar amount should be allowed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enario wherein the outstanding amount has been received during the year, the interest shall be calculated from the due date till the date of realization. In the scenario that the outstanding amount is received after 31st March 2008, the interest should be calculated from the due date till the last day of the relevant financial year i.e. 31st March, 2008. In support of his arguments Ld. Counsel has relied upon the judgment of Mumbai Bench of ITAT in the case of Tecnimont ICB House, (A.Y.2009-10 ITA No.487/Mum/2014, order dated 08.07.2015) for the proposition that interest can be charged only up to the end of the F.Y. With regard to the other proposition that rate of interest should be on the basis of LIBOR plus, reliance has been placed on the judgment of Pune Bench of ITAT in the case of iGATE Computer System Ltd. (ITA No.2504/PN/2012, A.Y. 2005-06, order dated 27.05.2015). 18.4. On the other hand, Ld. CIT DR has argued that interest should be spread in the next year also and appropriate direction can be given by the Tribunal for that. With regard to rate of interest, it has been suggested by the Ld. CIT- DR that it can be LIBOR plus 150 basis points. 18.5. In reply, Ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r directions, accordingly. Thus, Ground no.2 is partly allowed as in terms of our directions as stated above. 19. Ground No.3: In this ground, the assessee has challenged the action of Ld. AO in taxing an amount of ₹ 6,21,49,000/-being rental income from leased properties as 'Profits and Gains of Business or Profession', instead of 'Income from House Property'. 19.1. This ground is same as Ground No.4 of A.Y. 2007-08. Both the parties have confirmed that facts and issues involved in the aforesaid year are identical in this year, as well. Therefore, we direct the AO to follow our order of A.Y. 2007-08 on this issue. 20. Ground No.4: In this ground the assessee has challenged the action of Ld. AO in making disallowance u/s 40(a)(ia), on account of payments made to manufactures towards purchase of finished goods amounting to ₹ 69,14,21,000/- and purchase of packing materials amounting to ₹ 45,25,56,000/- by holding that these were liable for deduction of tax at source, under the provisions of section 194C of the Act. 20.1. We find that issue involved is identical to Ground no. 6 of appeal of A.Y.2007-08. It is informed that there is no change in facts in this ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed the appellant's appeal with regard to nondeduction of tax on clinical trial expenditure is incorrect in as much as the CIT (Appeals) - TDS had directed the AO to verify the break-up of clinical trial expenditure and grant relief accordingly. Attention is invited to the order dated 30 March 2013 passed by the CIT(A)-TDS for the year under consideration viz. AY 2008-09 wherein it has been held that tax is not deductible at source on the aforesaid items (refer compilation page nos 217 to 221). It may be noted that the department has accepted the orders passed by the CIT(A)-TDS for both the years i.e. AY 2007-08 and AY 2008-09. In the order dated 31st December, 2014 giving effect to the aforesaid order of the CIT(A) for AY 2008-09, it was held that taxes are not required to be deducted on clinical trial expenditure aggregating to ₹ 3,34,44,563 (refer compilation page nos 484 to 488). In view of the above, the appellant submits before Your Honour that the AO be directed to delete the disallowance under Section 40(a)(ia) in respect of clinical trial expenditure amounting to ₹ 3,34,44,563/-." 21.3. Thus, in nut shell, the assessee submitted that disallowance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the year under consideration. Thus, as the intangibles formed part of the block of assets during the AY 2008-09 and were sold in the same year, the gain is to be treated as short term capital gain. The assessee had submitted to the AO, extracts from the annual report of Parke Davis India Ltd to show that the said company was the licensed user of the said trademark/ license. 22.3. On reference to the DRP, the DRP upheld the action of the AO by stating that the assessee has sold a depreciable asset, the gain/loss on which is to be treated as per the provisions of section 50 of the Act. The DRP rejected the claim of the appellant that the license/trademark got transferred to the assessee with effect from 01. 12.2001 on account of amalgamation of assessee company with Parke Davis India Limited and held that the license/trademark has been recognized for the first time in the books of account during the AY 2008-09. 22.4. The assessee also filed a rectification application before the DRP to rectify the incorrect factual finding that the license has been recognized for the first time during AY 2008-09 as the right to use license/trademark was transferred with effect from 1 December ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of sale. Accordingly, there was no question of treating them as a short term capital asset and therefore no reason to charge them to tax as short term capital gains. The DRP has upheld that action of the AO on the ground that since the trademarks/ licences formed part of the block of assets and the same were transferred during the year under consideration, the gain arising therefrom is deemed to be short term capital gain as per the provisions of section 50 of the Act." 22.6. The provisions of section 50 were read during the course of hearing to contend that in order to treat capital gains arising from the transfer of the aforesaid licenses as shortterm capital gains, as per the provisions of section 50 of the Act, it was necessary that the following conditions mentioned in the said section be fulfilled viz. (i) The capital asset should be an asset forming part of block of assets, and (ii) Depreciation should have been allowed on it under the Income tax Act. It is only on the fulfillment of both these conditions that the provisions of section 50 shall get attracted. 22.7. It was further submitted that it was evident from Annexure -6A of the Tax Audit Report submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be hit by provisions of section 50. For the sake of ready reference, we find it appropriate to reproduce section 50 hereunder: "50. Notwithstanding anything contained in clause (42A) of s. 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed tinder this Act or under the Indian IT Act, 1922 (11 of 1922), the provisions of ss. 48 and 49 shall apply subject to the following modifications: (1) where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely: (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii)the written down value of the block of assets at the beginning of the previous year and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One has to look into the real 'substance' of the transactions and not merely its 'form', to determine the taxability in the given facts of a case. 22.15. It is undisputed fact that the impugned assets were acquired by the assessee company way back on 1st December, 2001, on the amalgamation of Park Devis India Ltd. Pursuant to sanction of the amalgamation scheme by the High Court of Bombay of 7th February, 2003 with effect from 1st December 2001. In view of the amalgamation, these assets viz. the licence for the right to use the impugned trade-marks/licence got transferred to the assessee company w.e.f. 1st Decemeber 2001. These vital facts have not been disputed or denied by the lower authorities. 22.16. Hon'ble Delhi High Court in the case of Mediworlds Publications (P) Ltd. (supra) held that trademarks, copy rights brand names goodwill etc. are capital assets and any gain arising on the transaction of these assets shall give rise to income taxable under the head of capital gain and not its business income. Now, under these facts and clear position of law it can be said, unhesitatingly, that the assessee company was holding these assets since 1st December 2001. Merely, because o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 23.2. On reference to the DRP, the DRP directed the AO to inquire into the matter with the departmental authorities as well as the insurance agencies and to carry out the proposed addition only if further verifiable and incriminating material is obtained against the assessee. However, as the assessment was getting time-barred, in the final order, the AO sought to make an addition without obtaining any incriminating and verifiable information against the assessee. 23.3. Aggrieved by the same, the assessee company filed appeal before the Tribunal. 23.4. It has been contended by Ld Counsel that the AIR statement did not even contain the names of the parties who had reported the said transactions pertaining to the insurance premium and the same were not even provided by the AO. In such circumstances, where even the identity of the payee is not known to the Department itself, there was no reason whatsoever of making an addition in respect thereof. In support of his claim, Ld. Counsel has relied upon the following judgments for the proposition that addition cannot be made merely on the basis of statement received through AIR: (i)A.F. Fergusson & Co. Vs. JCIT (ITA No.5037/Mum/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are duly recorded in the books of accounts. If it is pointed out by the assessee that certain transactions in the AIR statement do not belong to the assesse, then the AO should provide requisite details and evidences to the assessee establishing that impugned transactions do belong to the assessee. 23.7. We clarify that in our considered view, the primary onus is upon shoulders of the AO to show that the transactions reported in AIR belong to the assessee. It is only thereafter, the onus of the assessee shall start to show that these transactions have been duly recorded in the books of account of the assessee, failing which the addition may be liable to be made. With these directions, this issue is sent back to the file of the AO with further directions to grant adequate opportunity of hearing to the assessee. The assessee shall also extend requisite cooperation to the AO. This ground is allowed for statistical purposes. 24. Grounds No. 8 & 9: In these Grounds also the assessee has challenged the action of Ld. AO in making the addition by the AO on account of some differences on the basis of AIR information vis-a-viz transactions done with Americal Express Bank Ltd. and in Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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