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2017 (11) TMI 247
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.... 2,94,25,184/- in respect of disallowance of deduction claimed u/s 10A of the I.T. Act. 4. On the facts in the circumstances of the case and in law the CIT(A) has erred in deleting the addition of Rs. 1,42,75,498/- for disallowance of payment made to approved gratuity fund. 5. On the facts in the circumstances of the case and in law the CIT(A) has erred in deleting the addition of Rs. 94,14,147/- on account of advances written off without appreciating. That amount written off was in respect of security deposits of taken over business. The Ld. CIT (A) did not examine whether the security deposit was part of business transfer agreement or not. 6. On the facts in the circumstances of the case and in law the CIT(A) has the allowing relief for disallowance suo-moto made by the assessee. On the plea that the amount was inadvertently offered by him, without considering that no such plea was taken before the A.O. and the CIT (A) did not examine the reason for disallowance as made by the assessee. 7. The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of the hearing." 2. None appeared on behalf of the ass....
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.... which remand report was called upon. After considering the entire gamut of material and following the earlier year's orders the CIT (Appeals) held that the foreign loss would is a revenue nature. This point has also been discussed by the Tribunal in the appeal for the A.Y. 2003-04, wherein the Tribunal has allowed the assessee's claim and upheld the order of the Learned CIT(Appeals) in deleting the disallowance of foreign exchange fluctuations after observing and holding as under:- "We have carefully considered the rival contentions and the fact of the matter is that the assessee has made a provision of loss on account of foreign exchange fluctuation amounting to Rs. 1,85,84,380/- arising on account of import and export of goods, services rendered and received, interest on ECB and other revenue transactions. These expenses are deductible u/s 37 and28 itself. The detail of such expenditure is also at Page 171 of the PB which shows that it is revenue expenditure. For Assessment Year 2001-02 a similar amount of disallowance was made by the AO which has been deleted. For this year also the Ld. CIT (A) has deleted this disallowance after affording complete opportunity to the A....
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....facts qua the issue are that the assessee had an undertaking known as 'Technical Centre India' duly registered under Software Technology Parks of India (STPI) vide approval dated 29.32.2000. The said undertaking is engaged in the business of inbuilt computer software system for automotive component industry and in the return of income it has claimed a deduction of Rs. 2,94,95,184/- u/s 10A on the basis of audit report obtained in form no. 56F. The Assessing Officer had denied the said claim of the assessee on the ground that it has not filed approval/extension of approval of the 3 units and so far as the STPI unit of Bangalore is concerned, he held approval has to be provided by the Inter-Ministerial Standing Committee. The Ld. CIT (Appeals) had deleted the said addition not only following the earlier year's order of the CIT (Appeals) but also relied upon the CBDT circular no. 1 dated 31.3.2006, wherein it was clarified that the deduction u/s 10A which have been denied to STPI unit on the ground that if the approval/registration to such units has been granted by the director of Software Technology Parks India, then it is sufficient for making the claim. However, the assessee has du....
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....de in the books of account for payment of future gratuity liability. However, clause (b), which is an exception to clause (a) provides that where the provision is made for making payment towards an approved gratuity fund or for the purpose of payment of any gratuity that has become payable during the previous year, then the deduction of such a provision shall not be prohibited. Hence, I do not see any reason for disallowance u/s 40A (7). Further, after looking at the copy of approval letter granted by the CIT which is placed at Page No. 152 of the Paper Book, there is hardly any room for doubt and further, the A.O. in her remand report dated June 27, 2014 did not comment on these facts. The AO has simply mechanically disallowed the deduction on the ground that there was no explanation as to the nature of the fund. Further, the same ground has been allowed in AY 2003-04 and 2004-05. Since, there is no change in the facts and circumstances, I therefore delete the addition made by the AO and in the result allow this ground." 12. We find that the Tribunal in assessee's own case for the A.Y. 2002-03 has deleted the similar disallowance on the ground that the said gratuity trust ha....
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....ed by the said customers in order to ensure that the supply schedule in their concern does not go haywire. Thus the advances / security deposit which have become unrecoverable (more so for the reason that the appellant's steering division itself has been sold to Ms/ Rhodes India Automotive India Pvt. Ltd. vide Business transfer agreement) due to passage of time, are t allowable as business loss under section 28 itself, as these deposits were given during the course of business and in order to conduct the business and therefore the deposits were integral to the carrying out of business. Resultantly, the non recovery of such deposit should also as a corollary is required to be allowed as a business loss. In this connection, reliance is placed on the ratio of decisions in case of CIT v Crescent Films Pvt. Ltd. 248 ITR 670 (Madras) wherein, the Hon'ble Court has while giving its finding has made the following observations:- "A decision is to be regarded as a precedent for its ratiodecidendi and not for the facts in relation to which such ratio was laid down. The ratio of the case in CIT v. Coimbatore Pictures (P.) Ltd. [1973] 90 ITR 452 (Mad.) is that, before a deduct....
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....tomotive components. The assessee exported automotive components to its customer in USA in the financial Year 2004- 05. However, the products so manufactured and shipped by the assessee suffered from quality issues and reported of rusting and contamination. The quality problem and resultant rusting of goods resulted in refusal by the customer to accept the goods already shipped by the assessee to USA. Thus, due to quality issues, the customer refused to accept the goods physically lying in USA unless and until: * Appropriate inspection of the goods were carried out (to the satisfaction of the Customer) * Appropriate re-working of the goods (like doing the paint work, removal of moth balls etc.) were carried out to the satisfaction of the customer, and * Inspection report released certifying that the goods lying in USA were not suffering from quality issues. For this purpose, the assessee had to engage a non-resident Inspection Service Provider in USA called as 'Keystone Industries Ltd, USA' (Keystone) to carry out inspection and rework of the products while the products were physically lying in US port. The parameter on which the inspection was carried....
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.... DTAA which stipulates as under:- "Fees for included services" means- "payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services: a) xxxxxxxxxxxxxxxx b) make available technical knowledge, experience, skill, knowhow, or processes, or consist of the development and transfer of a technical plan or technical design." The protocol to the DTAA clarifies that technology will be considered to be "made available" when the person acquiring the service 'is enabled to apply the technology. However, in the instant case, the services rendered by Keystone were inspection services simplicitor and cannot be reckoned as technical services by any stretch of imagination especially within the scope of "Fees for included services" having make available clause under Article 12(4)(b). The aforesaid activities are not made available so that the person acquiring the service is able to apply the technology. Here providing for certificate/ report on rusting of goods and re-working on goods mainly fall in the category of inspectio....