TaxTMI 
TaxTMI 
2016 (1) TMI 634
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....deration, huge expenses claimed by the assessee cannot be allowed. 2.1 The Id. CIT(A) erred in holding that the assessee has the right to claim all the expenses under the head 'Income from business. 2.2 The Id. CIT(A) failed to appreciate that the assessee has sold its business of outsourcing ATMs lock, stock and barrel by way of slump sale in the year 2005-06. 2.3 The Id. CIT(A) ought to have seen that the offering of 'business income' of Rs. 7 lakhs against which expenditure of Rs. 2,93,09,185/- has been claimed is only to avoid payment of tax on its income from Other Sources (Interest income) of Rs. 2,56,64,169/-. 2.4 The Id. CIT(A) failed to note that even the alleged business receipt of Rs. 7,00,000/- was from its own group concern, M/s.Cash Link Global Systems (P) Ltd. which casts aspirations on the business receipt, particularly in the light of business expenditure claim of Rs. 2,93,09,185/-. 2.5 The Id.CIT(A) ought to have appreciated that the assessee was barred to carry on its line of business for a period of 3 years having regard to its Memorandum of Agreement, the assessee company cannot carryon any other business. 2.6 The Id. CIT(A) failed to ap....
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....mmissioner of Income Tax (Appeals) that even as per agreement, it is not restricted to carry on various businesses. It was further submitted before the Commissioner of Income Tax (Appeals) that assessee in fact carried on job work of outsourcing of ATMs business during the financial year 2005-06 and 2006-07 for eFunds International P.Ltd. and earned substantial revenue of `12.81 crores as business income, though business transfer agreement was entered into in the financial year 2004-05 with M/s. eFunds International P. Ltd. It was further contended that during the financial year 2007-08 relevant to assessment year 2008-09, it had carried on job work for its sister concerns and earned income of ` 7,00,000/-. Therefore, it does not mean that assessee has not carried on any business at all during the assessment year 2008-09. Considering the submissions of the assessee and the contentions raised by the Assessing Officer in the assessment order, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee in setting off the income against business loss holding that assessee carried on business activities during the assessment year 2008-09 under consideration against which ....
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....onitoring and content management except that these services may not be solicited for A TMs contracted with 1SC prior to Closing, or for those ATMs added on to those existing contracts post-Closing or from a customer of lSC as of Closing, without consent of Purchaser; (C) maintenance services for POS terminals and related hardware and software; (D) sale and support of 'plastic cards (but not including their production and issuance under outsourcing arrangements as performed in the Business); development, sale and/ or licensing of HMA Data / HMA Starware's proprietary software; (E) the business currently carried on by HMA Starware of licensing and support of Oasis IST switches, card related solutions and other such business; and (F) any other business whether or not related to the foregoing, which was not part of 1SC Transferred Business or agreed to be extensions of the Business as of Closing. (iv) During the Restricted Period, Purchaser shall offer to ISC or its Affiliates the rights of first refusal for Second Line Maintenance (SLM) for ATMs implemented or under contract for future implementation on an outsourcing basis under ISC contracts with customers as of th....
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....was of the opinion that the entire businesses were sold in the year 2005 by the assessee and further barred from entering into same line of business for three years. On appeal, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee holding that even though entered into business transfer agreement, the assessee conducted job work in the subsequent two financial years i.e. 2005-06 and 2006-07 to the very same M/s. eFunds International P.Ltd. by retaining portion of fixed assets and employees. Therefore, Commissioner of Income Tax (Appeals) elaborately considered the submissions of the assessee and the contentions of the Assessing Officer and concluded that the assessee carried on the business during the assessment year under consideration and therefore loss has to be allowed observing as under:- "I have considered the assessee's submissions as well as the assessment order carefully. The Assessing Officer's observations that consequent to the transfer of its "outsourcing of ATMs business" to M/s. eFunds International P Ltd in F.Y.2005, the assessee has not carried out any business, is factually not correct. No doubt the assessee is prohibited for entering ....
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....191/- and Rs. 6,97,22,8501-, respectively, which is about 1/4th to 1/5th of the regular business prevailing in F.Y.2004-05. Thus the assessee company was carrying on the business during the financial years and also offered the same under the head 'income from business'. These are the undisputed facts. As mentioned above, after the transfer of "outsourcing of ATMs business" to M/s. eFunds International P Ltd, the assessee retained portion of employees and infrastructure. These facts are clearly available from above details of P&L accounts of the assessee. The employee cost in F.Y.2004-05 (i.e. before the transfer of "outsourcing of ATMs business" to M/s. eFunds International P Ltd) was Rs. 140.74 lakhs. In the following year (i.e. after the transfer of "outsourcing of ATMs business") employee cost was Rs. 59.22 lakhs, which is about 42% of the previous year's employee cost. In other words, the assessee retained more than 40% of the employees/manpower even after the transfer of the business. With these employees/ manpower, the assessee company carried out the job-work to the transferee company M/s. eFunds International P Ltd in the following two financial years. Though t....
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.... Global Systems (P) Ltd and earned a business income of Rs. 7,00,000/- during the year, the Assessing Officer is not justified in coming to the conclusion that the assessee did not carry out any business activities during the year. On the other hand, the above facts clearly proves that the assessee's business activities are in existence and also earned a business income of Rs. 7,00,000/- during financial year relevant to the A.Y.2008-09, Hence the assessee has the right to claim all the expenses under the head 'income from business' and the resulting losses, if any, are also eligible for set. off against the income from other heads as per the law. The Assessing Officer is directed to allow the assessee's claim of losses under the head 'income from business' and their set off against the income of other heads." 7. On going through the order of the Commissioner of Income Tax (Appeals), it is very clear that the assessee has not transferred the entire undertakings but only portion of it was transferred by way of business transfer agreement and the assessee has carried on the business of job work of outsourcing of ATMs business in the financial years 2005-06 an....