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One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=461990 https://www.taxtmi.com/caselaws?id=461990 TP adjustment on account on account of purchase of shares of the AE - TPO re-worked the valuation as per DCF by replacing the projections with the actual for the reason that there is huge difference in the figures adopted for valuation and accordingly arrived at value of Rs. 19,612/- per share - HELD THAT:- During the course of hearing the ld AR submitted that the impugned transaction of sale of shares took place in tranches spread over 3 assessment years i.e. during AY 2016-17 9% of shares were sold, during AY 2017-18 26% and during AY 2018-19 14% were sold. Considering this fact, we are of the view that the above decision of coordinate bench in assessee's own case for AY 2016-17 [2022 (12) TMI 1564 - ITAT MUMBAI] is applicable for the year under consideration also. Therefore, we hold that there cannot be any TP adjustment. These grounds are allowed in favour of the assessee Disallowance of depreciation on intangibles representing acquisition of business contract - HELD THAT:- We notice that the co-ordinate bench in assessee's own case for A.Y. 2005-06 [2019 (1) TMI 1128 - ITAT MUMBAI] concluded that the contractual rights is a valuable commercial right and comes within the meaning of intangible asset as per section 32(l)(ii) r/w Explanation 3(b) of the Act. Applying the same ratio we hold that the depreciation claimed by the assessee on customer contracts acquired from WCIL, Value Edge and Denali are allowable. Depreciation claimed on capitalization of non-compete fee - As relying on Serum Institute of India Ltd [2012 (4) TMI 373 - ITAT PUNE] held that the payment made towards non-compete fee is an intangible depreciable asset. Respectfully following the above decision we hold that the depreciation claimed on non-compete fee acquired from Value Edge should be allowed. Accordingly this ground of the assessee is allowed. Disallowance u/s 14A - assessee has made investments in mutual funds, equity and preference shares - HELD THAT:- No disallowance can be made u/s 14A of the Act read with Rule 8D(iii) of the IT Rules, where the A.O. failed to record dissatisfaction of correctness of the claim of the assessee. Therefore the disallowance made under section 14A r.w.r 8D(2)(iii) is deleted. This ground of the assessee is allowed Disallowance u/s 36(1)(va) - delayed payment of contribution towards PF & ESI - entire amount as mentioned in the tax audit report has been disallowed - HELD THAT:- The Hon'ble Supreme court has now settled the issue of payment of employee's contribution to PF by holding that the same should be paid before the due date as specified in the respective Act. The assessee's claim that the contribution paid in the month of December, 2016 is paid before the extended due date as per the notification issued under the Employees Provident Fund Act needs factual verification. We, therefore, remit the issue back to the AO to verify the claim of the assessee and allow the claim in accordance with law keeping in mind the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt Ltd [2022 (10) TMI 617 - SUPREME COURT]. Disallowance u/s 43B - assessee during the year under consideration has reversed the provisions made towards bonus and leave encashment which was created for A.Y. 2016-17 - HELD THAT:- It is noticed that the AO in the final order of assessment has retained the same disallowance made towards reversal of provisions claimed by the assessee based on the disallowance made in the earlier assessment year. It is also noticed that the DRP has given a direction to the AO to verify the facts and the consider the return of income filed by the assessee for this year as well as the earlier year and allow the claim if it has already been disallowed. We, therefore, remit this issue back to the Assessing Officer with the direction to consider the relevant details filed by the assessee in this regard and allow the claim in accordance with law. Short credit of TDS - AR in this regard submitted that the Assessing Officer did not give credit for the entire TDS claim by the assessee and prayed for a direction in this regard. We accordingly direct the Assessing Officer to verify the claim of the assessee with respect to the TDS and allow the credit in accordance with law after giving a reasonable opportunity of being heard to the assessee. Credit towards the advance tax paid by the assessee for an amount - AR in this regard submitted that the assessing officer has not provided any reason as why there was a short credit towards advance tax. We therefore remit the issue back to the AO with a direction to examine the advance tax paid by the assessee based on the supporting evidences and allow credit accordingly. Denial of Foreign Tax Credit (FTC) claimed - AR submitted that the AO did not call for any details in this regard and there was no reason provided as why the FTC is denied. We heard the parties and it is noticed that there is no mention in the assessment order with regard to the denial of FTC claimed by the assessee. In our view this issue needs factual verification and therefore we remit the issue back to the Assessing Officer to examine the claim of FTC afresh and allow credit in accordance with law after giving a reasonable opportunity of being heard to the assessee. Case-Laws Income Tax Wed, 26 Jul 2023 00:00:00 +0530