TaxTMI 
TaxTMI 
2018 (9) TMI 1545
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.... "1. That the ld. CIT(A) has erred in treating the service charges as business income instead of house property income and allowing deduction of expenses and depreciation instead of deduction of 30% of annual rental value. 2. That the ld. CIT(A) has erred in allowing the loss of embezzlement of good of Rs. 32,61,237/- without appreciating the facts of the case that the said loss is "not wholly and exclusively for the purpose of the business". 3. That the ld. CIT(A) has erred in deleting the upward adjustment of Rs. 6,57,853/- ignoring provisions of section 92CA(3) of the I.T. Act. 4. That the assessee craves for leave to add, delete or modify any of the grounds of appeal before or at the time of hearing." 4. The grounds of appeal raised by the Revenue in ITA No.987/Kol/2017, for Assessment Year 2012-13are as follows: "1. That the ld. CIT(A) has erred in treating the service charges as business income instead of house property income and allowing deduction of expenses and depreciation instead of deduction of 30% of annual rental value. 2. That the ld. CIT(A) has erred in deleting the upward adjustment of Rs. 1,39,69,200/- ignorin....
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....The ld AO relying on the judgment of the Hon'ble Kolkata High Court in the case of Shambhu investment Pvt. Ltd's case reported in 249 ITR 47, wherein it was held that when rendering services are integral part of the tenancy agreement, it becomes part of income from house property. Therefore, on the same basis the service charges income of Rs. 2,40,28,343/-was added to the rental annual value under section 23 of the Act in assessing the house property income. The 30% deduction on such service charges was allowed in computing the house property income. 7. On appeal, the ld. CIT(A) deleted the addition. Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. The ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and is not being repeated for the sake of brevity. On the other hand, ld Counsel for the assessee defended the order passed by the ld CIT(A). 8. We have given a careful consideration to the rival submissions, perused the material available on record, we note that the said ground is covered by the decision of the Assessee's own case for AY 2006-07 passed....
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....ssment year 2005-06. The learned Tribunal while accepting the decision of the coordinate Bench and having found the CIT (A) has followed the decision of the Jurisdictional High Court we do not think the Learned Tribunal has passed any wrong order in any manner, whatsoever. We, therefore, do not find any infirmity in the same, though Mr. Bhowmick urged that the decision of the High Court was not on proper discussion or reason and it was dismissed with one line verdict. But we are of the view when the High Court dismissed an appeal and upheld the action of the learned Tribunal it is an acceptance of the High Court itself. Therefore, this appeal is dismissed accordingly. Certified Photostat copy of this order, be made available to the parties, lf applied for, upon compliance of usual formalities." As the issue is squarely covered by the judgment of the Hon'ble High Court (Supra) in the assessee's own case, as also the decisions of the ITAT Benches (Supra), and there is no change in facts and law and the ld DR for the Revenue is unable to controvert the findings of the judgment of the Hon'ble High Court (Supra), that being so, we decline to interfere in the order of ld C....
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....1-12, by the TPO and considering the fact that no corporate guarantee was given in the FY 2011-12, it was proposed to consider 3% as arm's length price (ALP) of corporate guarantee (CG) fee for the AY 2012-13 following order u/s.92CA (3) for the AY 2011-12. The assessee was asked to submit explanation and also to provide computation ofcorporate guarantee'( CG) fee for the AY 2012-13. 11. In response, the assessee submitted that the corporate guarantee cannot be treated as an international transaction, as no services have been rendered to the AE on account of provision of CG. The determination of CG do not have a proper basis as the pricing of loan varies from party to party and cannot be compared to interest charged from bank to others. The pricing of interest cannot be treated as a straight Jacket formula which can be curtailed down to only two variants i.e. initial cost of the bank and risk taken by the bank as the same do not take into consideration other commercial issues such as viability of the project, equity provided by the promoters, future option receipt by the bank etc. The assessee contended that the guarantee commission charged by the IDBI Bank @0.40% for an identic....
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....efore, ld TPO held that it is valid, in so far holding the transaction as International transaction and thereafter working out the inherent cost element to such transaction and ALP as a consequence. The ld TPO noted that as far as quantum of CG fee is concerned, it is to be stated that the CG was given in AY 2011-12 and the same was benchmarked by the TPO at the time of TP proceeding for that year after due consideration of the facts and circumstances involved in the transaction and objections put forward by the assessee. Since the CG is continuing in the year also without any change in terms and conditions and also quantum (as communicated and accepted by the assessee) there is no scope for revisiting the decisions taken by the TPO in the AY 2011-12. In view of the above facts, assessee's prayer for reduction of GG fee from 3% was rejected. Thereafter the arm's length rate of CG fee had been determined at 3% p.a. Accordingly, the quantum of arm's length adjustment on account of Corporate Guarantee fee computed as under: Value of CG Period of CG Arm's length rate of CG fee CG fee In INR USD CG fee IN INR USD 105,00,000 12 months 3% 315,000 ....
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....e Guarantee fee was assessed @3% as follows: Value of CG Period of CG Arm's length rate of CG fee GG fee In INR USD CG fee IN INR USD 105,00,000 12 months 3% 315,000 Rs.160,24,050/- Less: Already offered by the assessee in Form 3CEB Rs.20,54,850/- Arm's Length Adjustment Rs.1,39,69,200/ We note that the application of rate of 3 percent for guarantee commission, as computed by the ld TPO in above cited table, cannot be upheld in every case as it is largely dependent upon the terms and conditions, on which loan has been given, risk undertaken, relationship between the bank and the client, economic and business interest are some of the major factors which has to be taken into consideration. In this case, the assessee has itself charged 0.38% guarantee commission from its AE, therefore, it is not a case of not charging of any kind of commission from its AE. The only point which has to be seen in this case is whether the same is at ALP or not. We have already come to a conclusion in the foregoing paras that the rate of 3% by taking external comparable by the TPO, cannot be sustained....
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....A.Y. 2003- 04 to 2011-12, order dated 25.11.2016 and without considering the judgment of the Special Bench, on the theory of 'Base erosion profit shifting' in the case of M/s Instrumentarium Corporation, ITA No. 1548 and 1549/K/2009, for A.Y. 2003-04 and 2004-05 order dated 15.07.2016, therefore, we do not take into account the judgment of Coordinate Bench Kolkata in the case of M/s Tega Industries Limited (supra), so far the guarantee issue is concerned. In wake of these fact and without going into the other arguments of the assessee and also looking to the fact that the Tribunal in various cases has accepted guarantee commission chargeable between 0.5% to 1%, we hold that guarantee commission of 1% should be chargeable. Here in this case, assessee itself has agreed to charge guarantee commission @ 0.38%% of the outstanding guaranteed amount, accordingly, we also hold that a guarantee commission should be benchmark by taking the rate of 1% of the outstanding guaranteed amount in line with the consistent views taken by the coordinate Benches, from its AE and adjustments should be made accordingly. Thus, this ground raised by the Revenue is treated as partly allowed. 16. Groun....
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....he ld AO rejected the claim of the assessee for the following reasons: (i) The legal proceedings are not completed; hence the loss is contingent till settlement of case and final realization from the award. (ii) A claim for deduction of loss due to embezzlement cannot be admitted because theft of good which is by an employee by fraud on the proprietor can in no sense be said to be "an expenditure laid out or expended wholly and exclusively for the purpose of the business. Therefore, the amount of Rs. 32,61,237/- was disallowed by ld AO. 18. Aggrieved by the order of ld Assessing officer, the assessee carried the matter in appeal before the ld CIT(A) with success. The ld CIT(A) noted that the CBDT vide Circular No. No. 35-D (XLVII-20) [F. No. 10/48/65-IT (A-I)] dated 24-11- 1965, wherein it has been provided that losses arising due to embezzlement of employees or due to negligence of employees should be allowed if the loss took place in the normal course of business and the amount involved was necessarily kept for the purpose of the business in the place from which it was lost. The ld CIT(A) noted that loss took place in the normal course of business therefor....
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.... the Fidelity Guarantee Insurance Scheme against the impugned pilferage loss, as also that the said claim amount received from the National Insurance Co. Ltd was credited to the Profit& Loss account in financial year 2012-13 and included in computation of the total income of the assessee for assessment year 2013-14. The relevant proof was also submitted by assessee during the scrutiny hearing, as has been recorded by the Ld. AO. 21. It may be noted that the CBDT vide Circular No. No. 35-D (XLVII-20) [F. No. 10/48/65-IT (A-I)] dated, 24-11-1965, allows such type of losses. The relevant para reads as follows: " 1. A reference is invited to the instructions on the above subject contained in the Board's Circular No. 25 of 1939 and Circular No. 13 of 1944 [Clarification 2], In these circulars it was clarified that losses arising due to embezzlement of employees or due to negligence of employees should be allowed if the loss took place in the normal course of business and the amount involved was necessarily kept for the purpose of the business in the place from which it was lost" We note that the Hon'ble Supreme Court has considered the matter and laid down the law in ....