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TMI Blog2020 (1) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... and in not allowing the depreciation claimed by the assessee upon the categorizing the said income as income from house property. So as to, warrant interference hence we confirm the same. Assesse s appeal is thus found to be devoid of any merit and hence dismissed. Upward adjustment u/s 92CA(3) in respect of the international transactions of the appellant pertaining to payment of managements fees - HELD THAT:- Under the mutual agreement procedure the 70% actual expenses incurred under the management fees was allowed for Assessment Years 2007-08, 2008-09, and 2009-10 in respect of the case of the assessee itself. Advanced pricing agreement has been recognized as the highest body under the income tax authority being the CBDT and in view of the allowability of expenses made by the APA as mentioned hereinabove we are of the view that the management expenses cannot, at all be said to be nearly as the case sought to be made out by the revenue before us. In that view of the matter taking into consideration the advanced pricing agreement which was applied in respect of Assessment Years 2015-16, 2016- 17, 2017-18 and 2018-19, we are of the considered opinion to allow 1.5% of the ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt fund and Employees' State Insurance Corporation amounting ₹ 1,63,872 on the ground that the same was not paid on or before prescribed due date and therefore not allowable under section 43B of the Income-tax Act, 1961 ('the Act ). It is submitted that it be so held now and disallowance confirmed be deleted. 1.1 The learned CIT(A) as well as the learned AO erred in law and fact by not appreciating the decision of Hon'ble Apex Court in the case of Alom Extrusions Limited [319 ITR 306]. 2 The Learned CIT(A) erred in law and facts in upholding the disallowance of depreciation on building given on lease amounting ₹ 60,91,110/- by upholding the AO's decision that the lease rental income is income from house property and not business income under the Act. It is submitted that it be so held now and disallowance confirmed be deleted. 3 The Ld. AO erred in law and on facts in making and the Ld. CIT(A) in upholding an upward adjustment of ₹ 2,32,35,833/- u/s 92CA(3) of the Act in respect of international transactions of the appellant pertaining to payment of management fees. 4 The Ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that that the same was not paid on or before prescribed due date. The Ld. AO, therefore, added the same as it is not allowable under section 43B of the Income Tax Act, 1961. The same was further confirmed by the Ld. CIT(a) the issue is already been decided against the assessee in terms of the ratio laid down passed by the Hon ble Jurisdictional High Court in the case of Gujarat State Road Transport Corporation (GSRTC) reported in [2014] 41 taxmann.com 100 (Gujarat). Hence, we find no merit in this ground of appeal preferred by the assessee. The same, thus, dismissed. 3. Next ground relates to disallowance of depreciation of building given on lease amounting to ₹ 60,91,110/-. On the ground that the lease rental income is income from house property and not business income under the Act. During the year under consideration, the appellant has received rent of ₹ 93,72,000/- from Hanil Tubes India Pvt. Ltd. (HTIL) in respect of leasing of land and factory building. The said income was offered by the assessee under the head business income . In reply to show-cause issued by the AO as to whether the said income should not be taxed under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty and depreciation is allowable to be disallowed. It is a fact that the building has been given on the lease on appellant amounts to letting out of the house property simply sitter without involving any other activity on the part of the appellant and thus letting out of the said house property cannot be deemed to be carrying on any business by the appellant. In an identical situation the Hon ble Apex Court in the matter of the Universal Plast Ltd. (1999) 103 taxmann 493(SC). The Hon ble Apex Court decide lease rent received from letting out the factory premises in respect of which the assessee had decided to go out of business was to be assessed as income form house property and not business income. Relying upon the judgment while confirming the order passed by the Ld. AO the Ld. CIT(A) observed as follows:- 5.4. On the basis of such discussions, the Apex Court ruled that the lease rent received from letting out the factory premises in respect of which the assessee had decided to go out of business, was to be assessed as income from house property and not as business income. In the present case also, the appellant never intended to conduct any business by util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy Corporation, USA. In the latter years, TI Group acquired Bundy Corporation. In the year 1992, TI Group also acquired majority shareholding in Bundy India and the name of the company was changed to Bundy India Limited. Since then, Bundy India Limited became part of TI Group. It is engaged in the business of manufacturing of copper coated steel tubes, plastic fuel tanks and providing support services in IT, CAD other services and manufacturing of equipment required to make fluid carrying components. The appellant had filed its return of income for the year AY 2011-12 on 29lh November 2011 declaring an income of ₹ 2,96,83.690 under the normal provisions of the Income Tax Act, 1961 (the Act) based on the position prevailing as on the date of filing of the return of income. The book profit returned u/s. 115JB of the Act amounted to ₹ 7,35,82,357. The return was then selected for scrutiny assessment and an order dated 7th April 2015 was passed u/s. 143(3) r.w.s. 144C(3) of the Act by the learned Dy. Commissioner of Income Tax, Circle - 1(1), Vadodara (the learned AO) assessing the total income at ₹ 2,96.83,690 under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has failed to justify the arm s-length nature of the management charges paid by it to the associate enterprise and therefore the arm s-length price of the management fees is taken at nil using CUP method as the most appropriate method as the observation made by the Ld. TPO. Accordingly, an assessment of ₹ 2,31,35,833/- has been proposed to be made to the total income of the assessee in order that the international transaction undertaken by the company are at arm s-length which was also followed by the Ld. Assessing Officer against which appeal has been preferred by the assessee. However the same has been confirmed by the First Appellate Authority. Hence, the instant appeal before us. 7. Heard the respective parties, perused the relevant materials available before us. We have also gone through the date provided by the Ld. Senior Counsel in this aspect at the time of hearing before us. It appears that under the mutual agreement procedure the 70% actual expenses incurred under the management fees was allowed for Assessment Years 2007-08, 2008-09, and 2009-10 in respect of the case of the assessee itself. The details in respect of allowability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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