TaxTMI 
TaxTMI 
2018 (1) TMI 450
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....r the year under appeal, are of general nature. Hence, same are not being adjudicated. 2. First effective ground of appeal(Gs. OA-4to11)is about Transfer Pricing Adjustment of Rs. Rs. 3, 68, 00, 000/-. During the assessment proceedings, the AO found that the assessee had entered in to various International transactions(IT. s)with its Associated Enterprises (AE. s). He made a reference to the Transfer Pricing Officer(TPO) to determine the arm's length price (ALP) of such transactions. After receiving the order of the TPO, the AO made an adjustment of Rs. 5. 09 crores in the draft assessment order. The assessee filed objections before the DRP challenging the proposed adjustments. 2.1. After considering the submissions of the assessee and the order of the TPO, the DRP held that the AO was justified in making TP adjustment for the amount charged for business auxiliary services, that a mark-up of 30. 56% was rightly charged in respect of such services as against the mark-up charged by the assessee, that that business auxiliary services rendered by the assessee were functionally comparable with the seven comparable companies, namely Ajcon Global Services Ltd. , Brescon Corporate Ad....
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....pment related services and under3 charging for central services were subsumed once assessee's margin at entity level for AE's transactions was at arm's length, that the ITAT had deleted the entire transfer pricing adjustment of Rs. 368. 79 crores made for that year, that the Hon'ble Bombay High Court dismissed the appeal filed by the departments on this issue of deletion of adjustment of Rs. 3, 68, 79, 26, 000/-(ITA No. 1873 of 2013-Para 2, Pg. 66, Para 3-Pg. 68-69, dtd. 26/07/2016 ). Nothing has been brought on record that the facts for the year under consideration are different in any manner, except for the amount involved, from the facts of the last AY. Therefore, following the order of the Tribunal for that year, and the aforesaid judgment of the Hon'ble Bombay High Court for the same year, we decide the effective ground of appeal in favour of the assessee. 2.3.1. Here, we would also like to mention that that the DRP has inadvertently observed that assessee had not taken any ground before it about business auxiliary services, that grounds number 7 raised by the assessee before it dealt with the issue of business auxiliary services. that detailed submissions were made....
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....f granted by the Tribunal. Therefore, following the orders of the Tribunal for the earlier AY. s, we decide GOA 16 in favour of the assessee. 6. Disallowance of expenditure, amounting to Rs. 2. 85 crore, attributable to earning of dividend income, u/s. 14A of the Act, is the subject matter of the next ground of appeal. During the assessment proceedings, the AO found that the assessee had earned exempt income of Rs. 54. 87 lakhs, Rs. 11. 58 crores and Rs. 32. 29 crores u/s. 10(15), 10(34) and 10(35) of the Act respectively, that it had offered suo-motu disallowance of Rs. 19, 75, 103/-. He applied the provisions of Rule 8D of the Income tax Rules, 1962(Rules)to work out the expenditure attributable to exempt income and made a disallowance of Rs. 7. 72 lakhs under the head 'interest expenditure' and Rs. 2. 78 crores under the head '0. 5% of average investment'. 6.1. The DRP, after considering the objections of the assessee held that out of the total interest expenditure of Rs. 21. 78 crores expense to the tune of Rs. 20. 64 crores, related to export income, should not be considered for working out the disallowance under section 14A of the Act. The AO after considering the disal....
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..../annual accounts of the assessee that no borrowed funds were utilized and the investment made by the assessee is out of its own funds, therefore, the provision cannot be invoked arbitrarily. It is also noted that the assessee suo-moto made the disallowance, wherever, it was suppose to do so. Thus, on this count, we allow this ground of the assessee, more specifically when own funds are much more in excess of the borrowed funds. . . . . . . xxxxx 3.28. In the light of the foregoing discussion, we find that neither the Ld. Assessing Officer nor the Ld. Commissioner of Income Tax (Appeal) pointed out any defect in the accounts of the assessee, therefore, the ratio laid down in the case of Britania Industries Ltd. vs DCIT (ITA No. 390/Kol/2013) order dated 02/03/2016, M/s Raptakos Brett & Co. Ltd. vs Addl. CIT(A) (ITA No. 7490/Mum/2013) order dated 10/11/2016 supports the case of the assessee. The ratio laid down in M/s Fedex Finance Pvt. Ltd. vs DCIT (ITA No. 1073 and 1067/Mum/2013) and M/s White Water Mass Media vs ACIT (ITA No. 2963/Mum/2013) supports the case of the assessee. It is also noted that during assessment proceedings, the report of the accountant, specif....
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.... the departmental authorities was based on factually incorrect exemptions, that the expenditure was incurred for temporary site before shifting to the new office premises, that the same was to be allowed as revenue expenditure. He relied upon the case of Transwitch India(P. )Ltd. (151TTJ177). The DR argued that assessee had not filed necessary details before the AO/DRP about the expenditure. 8.3. We have heard the rival submissions and perused the material before us. We find that the AO and the DRP has held that the expenditure incurred by the assessee was transactional expense, that the assessee has claimed that expenditure was incurred for a temporary site and that before shifting to the new office premises the assessee had incurred the expenditure. From the order of the AO the factual position is not emerging clearly. Therefore, we are of the opinion that matter needs to be further verified by the AO. In the interest of Justice, we are restoring back the issue to the file of the AO for fresh adjudication. The assessee is directed to file the details of expenditure incurred to prove that same was incurred for shifting the office to a temporary site. It should also file the chr....
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....10.2. Before us, the AR made the same submissions that were advanced before the DRP by the assessee. The DR supported the order of the departmental authorities. 10.3. We find that the DRP had specifically directed the assessee to file justification for treating the interest income as business income, that it had not filed any explanation in that regard. Interest income can be taxed under both the heads i. e. business income or income from other sources depending upon the facts of the case. So, no hard and fast rule can be made in that regard. In the matter under considerationthe DRP has given a finding of fact that assessee was not in the business of money lending, that the surplus funds available with it were kept in various deposits on which interest income had been earned. Nothing has been brought on record that finding given by the DRP is not based on facts. In our opinion, if surplus available with an assessee earns interest from the deposits made by it, then it cannot be taxed under the head business income. In short, the DRP has rightly observed that the assessee is not in the business of money-lending/earning income from its business. Therefore, in our opinion there is n....