TaxTMI 
TaxTMI 
TaxTMI 
2021 (10) TMI 1053
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.... learned Counsel for the assessee, on instructions, did not press ground nos. 1 and 4. Accordingly, ground nos. 1 and 4 are dismissed as not pressed. 3. In ground no. 2, the assessee has challenged denial of deduction claimed under section 10A of the Income Tax Act, 1961 in respect of income derived from training activity. 4. Briefly the facts are, the assessee is a resident company engaged in the business of providing software solutions to banks and financial institutions. For the assessment year under dispute, assessee filed its return of income on 28.11.2003 declaring total income of Rs. 34,43,28,030/-. In course of assessment proceedings, the Assessing Officer (AO) while verifying the return of income filed by the assessee noticed that the assessee has claimed deduction under section 10A of the Act in respect of income arising out of training activity. When called upon to justify the claim of deduction on such income, the assessee submitted that the training is related to the products of assessee company and is carried out at the request of the customer, wherever, the customer so desires. Further, it was submitted, the training activity is connected to the core activity, hence....
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.... 24.03.2014. Facts being identical, respectfully following the decision of the co-ordinate Bench and the Hon'ble jurisdictional High Court in assessee's own case, as referred to above, we direct the AO to allow assessee's claim of deduction under section 10A of the Act by including it both in the total turnover as well as export turnover. This ground is allowed. 8. In ground no. 3, assessee has challenged the disallowance of deduction claimed under section 10A of the Act in respect of interest income. 9. Briefly the facts are, in course of assessment proceedings, the AO noticed that in the year under consideration, the assessee had earned interest income of Rs. 20,96,46,473/-. However, in the computation of income, the assessee included interest income of Rs. 12,37,49,444/- as pertaining to two units eligible for claiming deduction under section 10A of the Act and has also claimed deduction under the said provision. Whereas, the balance amount of Rs. 8,58,97,029/- was offered to tax. Being of the view that the entire interest income has to be treated as income from other sources on which no deduction under section 10A can be claimed, the AO disallowed assessee's claim of deductio....
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....ct can be granted. In this context, he relied upon the decisions referred to by the AO and learned Commissioner (Appeals). 14. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. The precise issue arising for consideration is, whether the assessee is eligible to claim deduction under section 10A of the Act in respect of a part of the interest income. As could be seen from the facts on record, the assessee had earned interest income on bank deposits, bonds, loans to employees, loans to subsidiary etc. Undisputedly, out of the total interest income earned, the assessee has apportioned an amount of Rs. 12,37,49,444/- to the 10A units. It is the stand of the assessee that the interest income on which deduction under section 10A of the Act was claimed was because of temporary parking of surplus funds available to the 10A units out of the export proceeds. Thus, it is closely related to the activity of the 10A units. 15. A reading of section 10A of the Act would show that profits and gains derived by an undertaking from export of articles or things or computer software would be eligible for deduction. Whereas, in the decisions ....
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....interest charged on delayed receivables. Briefly the facts are, in course of proceedings before him, the Transfer Pricing Officer (TPO) found that significant part of bills raised by the overseas associated enterprises (AEs) on the end customers have not been remitted to the assessee immediately. On verifying the details, he found that on an average the subsidiaries are taking 272 days to remit to dues to the assessee. Whereas, the third party distributors and customers are remitting dues in 72 days. Therefore, he called upon the assessee to explain why interest should not be charged for the delay in receivables from the AEs. In response, assessee submitted that the remittance by the AEs is completely dependent upon the payment made by the end customers. It was submitted, until the end customers make payment, the subsidiaries cannot remit to the assessee. To establish such claim, the assessee also furnished some evidences before the TPO. 17. alleging that the assessee was unable to show on invoice basis the date on which subsidiaries received the dues from the end customers and remitted to the assessee, the TPO held that the subsidiaries having collected from the end customers hav....
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.... assessee's contention that there could be delay/considerable time gap in remittance of receivables by the overseas subsidiaries and the third party distributors, as the AEs are not the end customers, whereas, the third party distributors are themselves the customers. He has also appreciated the fact that some of the subsidiaries in USA and Netherland are incurring losses. Thus, when the AEs themselves are not the end customers and their remittance to the assessee, in turn, depends upon the remittances by the end customers, it cannot be said that the AEs have benefitted because of delay in remitting the receivables. 21. It is also observed, before the TPO the assessee had furnished certain evidences including the bank statements of subsidiaries and reconciliation statement reconciling the time gap in amounts receivable from subsidiaries and from third parties. These evidences furnished by the assessee, certainly, support assessee's claim that the delay in receivables was purely because of the delay in receipt from end customers. In fact, learned Commissioner (Appeals) has also appreciated this fact. Thus, after taking into consideration the entire factual aspect, we are of the vie....
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....unt of marketing the assignment of customization. Further, he observed, there is no justification in paying a part of the customization fee to subsidiaries while not doing so in case of third party distributors. Thus, ultimately, he held that the entire customization fee of Rs. 1,53,17,531/- paid to the subsidiaries needs to be adjusted by applying Comparable Uncontrolled Price (CUP) method and the customization service rendered by subsidiaries was determined at nil. Assessee challenged the aforesaid adjustment before learned Commissioner (Appeals). Taking note of the fact that similar adjustment made in the preceding assessment year was deleted by his predecessor in office, learned Commissioner (Appeals) deleted the adjustment. 26. Before us, it is common point between the parties that the issue is squarely covered by the decision of the co-ordinate Bench in assessee's own case in assessment year 2002-03, which has been upheld by the Hon'ble jurisdictional High Court. 27. Having considered rival submissions, we find, identical issue arose in assessee's own case in assessment year 2002-03. While deciding the issue, the Tribunal in ITA No. 3699/Mum/2006 dated 31.08.2010 has held a....
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.... charged on delayed receivables. This ground corresponds to ground no. 3 of assessee's appeal for the very same assessment year being ITA No. 5023/Mum/2007. While deciding the issue in the earlier part of the order, we have deleted the entire adjustment. That being the case, this ground of revenue is dismissed. 30. In ground no. 4, the revenue has challenged deletion of interest charged under section 234D of the Act. 31. At the time of hearing, learned counsel for the assessee fairly stated that this ground of the revenue has to be allowed in view of the present legal position on the issue. 32. Keeping in view the aforesaid submission of learned counsel for the assessee, we reverse the decision of learned Commissioner (Appeals). This ground is allowed. 33. In the result, appeal is partly allowed. (ITA No. 4488/Mum/2010) (Assessee's appeal for Assessment year 2004- 05) 34. The only ground raised in this appeal relates to denial of deduction claimed under section 10A of the Act in respect of interest income. 35. The issue raised in this ground is identical to the issue raise in ground no. 3 of ITA No. 5023/Mum/2007 decided in the earlier part of this order. Following our detai....