TaxTMI 
TaxTMI 
2022 (4) TMI 544
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....s consolidated order. Further, as the basic facts in all these appeals are same, we have elaborately mentioned only the facts for assessment year 2011-12 for the sake of brevity. However, if any particular issue is arising in any assessment year for the first time, the facts pertaining to the same are discussed accordingly. ITA no.1650/Mum./2016 Assessee's Appeal - A.Y. 2011-12 3. In this appeal, the assessee has raised grounds pertaining to the additions made by the Assessing Officer in corporate tax as well as transfer pricing. We will first deal with the issues relating to corporate tax additions. 4. The assessee is a Public Limited Company and is engaged in the business of export of computer software providing e-solutions, BPO activities and other management consultancy activities. During the relevant assessment year, the assessee company filed its return of income electronically on 23.11.2011, declaring total income of Rs. 19,98,64,93,014. The book profit under section 115JB of the Act was declared at Rs. 48,49,54,27,020. The assessee was assessed to tax under the normal provisions of the Act. 5. The issue arising in ground no.2 in assessee"s appeal is pertaining t....
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....dinate Bench of the Tribunal in assessee"s own case for the assessment year 2009-10. 8. On the other hand, Ms. Vatsalaa Jha, the learned Departmental Representative ("learned D.R.") vehemently relied upon the orders passed by the lower authorities. 9. We have considered the rival submissions and perused the material available on record. We find that on identical issue, the Co-ordinate Bench of the Tribunal in assessee"s own case vide order dated 30.10.2019, passed in Tata Consultancy Services Ltd. v/s ACIT, ITA no.5713/Mum./2016, for the assessment year 2009-10, following the decision of the Hon'ble Jurisdictional High Court in Reliance Infrastructure Ltd. v/s CIT, [2017] 390 ITR 271 (Bom.) observed as under:- "6. We have considered the rival submissions and perused the material on record. From the stage of the assessment proceeding itself, it is the claim of the assessee that the term "tax", as defined under section 2(43) of the Act would only include taxes chargeable under the Indian Income Tax Act. It is the further case of the assessee that since in respect of the State taxes paid overseas, the assessee is not eligible to claim relief under section 90 or 91 o....
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....s levied overseas which are not eligible for relief either under section 90 or 91 of the Act, would not come within the purview of section 40(a)(ii) of the Act. It is the specific plea of the assessee that the State tax is not covered either under Indo-US or Indo-Canada tax treaty, hence, not eligible for any relief under section 90 of the Act. Pertinently, unlike section 91 read with Explanation-(iv), section 90 does not provide for inclusion of tax levied by any State/ local authority of that country within the expression 'income tax'. In view of the aforesaid, we direct the Assessing Officer to verify whether the State taxes paid by the assessee overseas are eligible for any relief under section 90 of the Act and if it is not found to be so, assessee's claim of deduction should be allowed. In view of our decision above, no separate adjudication of grounds no.1.2 is required." 10. The aforesaid conclusion was also followed by another Co-ordinate Bench of the Tribunal in assessee"s own case vide order dated 18.08.2020, passed in Tata Consultancy Services Ltd. v/s DCIT, ITA no.794/Mum./ 2018, for the assessment year 2010-11. As the facts and circumstances of the present case are....
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....able to tax in India. The Assessing Officer, vide draft assessment order dated 16.02.2015, held that the payment made for import of software is in the nature of royalty within the meaning of section 9(1)(vi) of the Act. The Assessing Officer also referred to Explanation-3 to section 9(1)(vi) of the Act as well as CBDT Circular no.621 dated 09.12.1991, in support of its conclusion. Accordingly, the Assessing Officer disallowed payment of Rs. 127,66,11,637 [i.e., Rs. 77,44,41,142 (+) Rs. 50,21,70,495] under section 40(a)(i) of the Act for non-deduction of tax at source under section 195 of the Act. 15. Being aggrieved, the assessee filed objections before the DRP. Vide directions dated 16.11.2015, the DRP, following order dated 04.11.2015 passed by the Co-ordinate Bench of Tribunal in assessee"s own case in ITA No. 7513/Mum/2010 for assessment year 2005-06, directed the Assessing Officer to capitalise the expenditure incurred by the assessee on import of software. In conformity with the directions issued by DRP, Assessing Officer vide impugned final assessment order dated 29.01.2016, capitalised the expenditure in respect of import of software and allowed depreciation on same to t....
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.... import of software was capitalised and deprecation was allowed, in conformity with aforesaid directions of DRP, is directed to be set aside. 19. We further noticed that the Co-ordinate Bench of Tribunal while deciding the similar issue in favour of the assessee for assessment year 2005-06 vide order dated 23.03.2017 considered agreements entered into by the assessee for purchase of software. The Tribunal also noted that CIT(A) had also taken note of various agreements entered into by the assessee and considered the relevant clauses of the agreement while deciding that the payment would not fall within the definition of "royalty" and thus not taxable in the hands of the payee in India in absence of there being "PE" of the vendors in India. However, in the present case the Assessing Officer has not at all deliberated on the factual aspect of the issue and has not considered the agreements entered into by the assessee with vendors for import of software and merely by relying upon certain judicial precedents and statutory provisions have come to the conclusion that the payment made by the assessee for import of software is in the nature of "royalty" under section 9(1)(vi) of the Ac....
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....he relevant assessment year, the assessee had earned dividend income of Rs. 39,27,12,369, which was claimed as exempt under section 10(34) of the Act. As the assessee had not worked out any expenditure eligible for earning the aforesaid exempt income, during the course of assessment proceedings, the assessee was asked to furnish the details of dividend income earned and the expenditure incurred as per the provisions of section 14A r/w rule 8D. In reply, the assessee submitted that the expenditure of Rs. 71,98,280, have been identified towards salary and other overheads for earning exempt income and offered the same for disallowance under section 14A of the Act. The assessee further submitted that there was no direct expenditure which was incurred by the assessee to earn the exempted dividend income and accordingly the assessee has allocated indirect expenditure incurred for earning the exempt income. As per the assessee, the Treasury Department of the assessee carries on the activities of forex management, investment management, cash management, retrial fund management. As investment being one of the activities of the Treasury Department among all the four activities, salary cost o....
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.... exempt income on ad-hoc basis. The Revenue has also not discharged its onus that the claim made by the assessee is incorrect and there exist a direct nexus between the expenditure disallowed under section 14A and the exempt income earned by the assessee. We find that in similar facts and circumstances, the Co-ordinate Bench of the Tribunal in assessee"s own case vide order dated 18.08.2020, passed in DCIT v/s Tata Consultancy Services Ltd., ITA no.1207/Mum./2018, for the assessment year 2010-11, dismissed the appeal filed by the Revenue against the order passed by the learned CIT(A) deleting the disallowance made by the Assessing Officer under section 14A of the Act by observing as under:- "30. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. The AO after invoking the provisions of Rule 8D made disallowance of Rs. 14,12,77,945/-, which consist disallowance under Rule 8D(2)(i) of Rs. 53,18,829/- (suo moto offered by assessee), under Rule 8D(2)(ii) of Rs. 14,391/- and Rule 8D(2)(iii) of Rs. 13,59,44,725/-. We have noted that the assessee furnished the working of suo moto disallowance of Rs. 53,18,829/-, which....
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....es were incurred by the assessee for advertisement in newspaper, marketing of its products, etc., in respect of its on-going business. During the course of assessment proceedings, the assessee was asked to show cause as to why the said expenditure should not be treated as capital in nature. In reply, the assessee submitted that the expenditure was routinely incurred by the assessee for advertisement in newspaper, marketing of its products, etc. in respect of its on-going business. Thus, the same was submitted not to be in the nature of brand building expenditure and thus not capital in nature. The Assessing Officer vide draft assessment order dated 16.02.2015, treated the amount of Rs. 49,74,90,893, as brand building expenditure having enduring benefit to the assessee and accordingly, treated the same as capital in nature. The Assessing Officer also granted depreciation @ 25% amounting to Rs. 12,43,72,723. 31. The DRP, vide its directions dated 16.11.2015, upheld the disallowance made in the draft assessment order on this issue. Being aggrieved, the assessee is in appeal before us. 32. During the course of hearing, the learned Sr. Counsel submitted that the expenditure incurr....
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.... the turnover of the assessee, the expenditure incurred on advertisement does not appear to be unusually high. That being the case, the expenditure incurred on advertisement cannot be treated to be in the nature of capital expenditure and amortized over a period of five years. To that extent, we agree with the decision of learned Commissioner (Appeals) on the issue. However, as regards experience certainty expenditure amounting to Rs. 5.28 crore, it appears that learned Commissioner (Appeals) has held it to be of capital nature on the basis that the assessee itself admitted so. However, before us, leaned Sr. Counsel for the assessee has vehemently argued that no such admission was made by the assessee before learned Commissioner (Appeals) and under a misconception, learned Commissioner (Appeals) has come to such conclusion. The leaned Sr. Counsel submitted, the experience certainty campaign was also for the purpose of advertisement only and in this context, he has furnished before us the details of such expenditure through additional evidences. Since, the additional evidences furnished by the assessee will have a crucial bearing in determining the nature of expenditure, we are incl....
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.... basis of their profitability. The payment made by the assessee towards subscription fee is for the purpose of carrying out normal business activities of the company. Learned Senior Counsel further submitted that in case of sister concerns similar payment has been allowed by the Tribunal. On the other hand, learned D.R. vehemently relied upon the orders passed by the lower authorities. 39. We have considered the rival submissions and perused the material available on record. As per the "Tata Brand Equity and Business Promotion Agreement", the assessee was under contractual obligation to make annual payment towards the subscription fees. According to assessee, in consideration of this subscription fees, Tata Sons Limited was, inter-alia, responsible for organising corporate identity and brand promotional activities and campaigns, engage professional consultants, make available a pool of sharable resources of the Tata Group to the assessee and provide assistance in accessing the network of domestic and international business contacts and also permit the assessee to use the business name. All the activities were predominantly the activities carried out or to be carried out by Tata ....
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.... reliance upon the decision of Hon"ble Karnataka High Court in Samsung Electronics Company Ltd. held that as the assessee has neither deducted TDS nor sought exemption certificate from the Department, commission payment of Rs. 8,69,33,182 is not allowable under section 40(a)(i) of the Act. The DRP vide direction dated 16.11.2015 upheld the disallowance made in the draft assessment order on this issue. Being aggrieved, the assessee is in appeal before us. 43. During the course of hearing, learned Senior Counsel submitted that the payment of commission to non-resident agents are not chargeable to tax in India under section 5 read with section 9 of the Act as the non-resident agents operated outside India and the commission was remitted directly outside India. Thus assessee was not liable to deduct TDS under section 195 of the Act. On the other hand, learned D.R. vehemently placed reliance on the orders passed by lower authorities. 44. We have considered the rival submissions and perused the material available on record. We find that on identical issue, the Co-ordinate Bench of the Tribunal in assessee"s own case vide order dated 30.10.2019, passed in ACIT v/s Tata Consultancy S....
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....e additional/double reduction of foreign currency communication expenses of Rs. 45.91 crore, if any, from Export and Total Turnover as per law. As a result, ground no.8 raised in assessee"s appeal is allowed for statistical purpose. 47. The issue arising in ground nos.9 and 10, raised in assessee"s appeal is regarding deduction under section 10AA of the Act in respect of SEZ units of the assessee which commenced its operations during earlier years. 48. The brief facts of the case pertaining to this issue as emanating from the record are: The assessee had claimed deduction under section 10AA of the Act for the first time during the assessment year 2007-08. The relevant assessment year is the fifth year of deduction claimed on SEZ units under section 10AA of the Act. During the relevant assessment year, the assessee had claimed deduction under section 10AA of the Act in respect of SEZ units which had commenced its operation during the earlier assessment year i.e., A.Y. 2008-09, 2009-10 and 2010-11. In addition, the assessee had commenced operation in respect of below mentioned new SEZ units in respect of which deduction under section 10AA of the Act was claimed by the assessee.....
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.... SEZ unit during the previous year. The Assessing Officer vide draft assessment order dated 16.02.2015, came to the conclusion that during the relevant assessment year, more than 3/4th of the employees of the existing business of the assessee were relocated to the SEZ units which is nothing but re-construction of the business and thus, the assessee is not entitled to deduction under section 10AA of the Act. The Assessing Officer further held that over the years there have been substantial increase in employees and corresponding increase in revenue of SEZ units as compared to other units of the assessee. Accordingly, the Assessing Officer denied the deduction under section 10AA of the Act in respect of SEZ unit which have already commenced operation prior to relevant assessment year. 50. The DRP vide its directions dated 16.11.2015, held that the eligibility of deduction under section 10AA of the Act in relevant assessment year is dependent upon the final outcome on this issue in earlier assessment years and accordingly directed the Assessing Officer that the disallowance as proposed in the draft assessment year should be subject to final decision in the earlier assessment years.....
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....w business, of machinery or plant previously used for any purpose. Explanation.-The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section." 54. The Hon'ble Supreme Court in DCIT v/s ACE Multi Axes Systems Ltd., [2018] 400 ITR 141 (SC) while dealing with the issue of eligibility of deduction under section 80IB of the Act has observed as under:- "No doubt, certain qualifications are required only in the initial assessment year, e.g. requirements of initial constitution of the undertaking. Clause 2 limits eligibility only to those undertakings as are not formed by splitting up of existing business, transfer to a new business of machinery or plant previously used. Certain other qualifications have to continue to exist for claiming the incentive such as employment of particular number of workers as per sub-clause 4(i) of Clause 2 in an assessment year. For industrial undertakings other than small scale industrial undertakings, not manufacturing or producing an article or things specified in 8th Schedule is a requirem....
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....TAA, on the amount of income which is doubly taxed i.e. income taxed in India and in foreign country. The relief was computed by comparing the tax payable in India with the tax paid in foreign country on the doubly taxed income and is restricted to the foreign taxes or Indian taxes whichever is lower. In addition to above, during the course of proceedings before the DRP, the assessee raised an additional ground claiming that foreign tax credit should be allowed, as per respective tax treaties in respect of taxes paid overseas, on income eligible for deduction under section 10A/10AA of the India. In support of the additional ground of objection, the assessee placed reliance on the decision of Hon"ble Karnataka High Court in Wipro Limited v/s DCIT, [2016] 382 ITR 179. The DRP vide directions dated 16.11.2015 refused to render any directions on the additional ground of objection on the basis that the issue doesn"t relate to the variation of the income and further is not emanating from the draft assessment order. Being aggrieved the assessee is in appeal before us. 58. During the course of hearing, the learned Sr. Counsel by placing reliance on the decision of the Hon"ble Karnataka ....
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....ected to tax in both the countries. Therefore, the foreign tax credit would be available to the assessee in all cases except the foreign tax paid in Finland and Canada. The Assessing Officer is directed to grant credit accordingly." 62. The learned D.R. could not show us any reason to deviate from the aforesaid order and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the decision of the Co-ordinate Bench rendered in assessee"s own case cited supra, ground no.11, raised in assessee"s appeal is allowed with similar directions. This ground is allowed for statistical purpose. 63. Similarly, ground no.11.1 is also restored to the file of the Assessing Officer for de novo adjudication in accordance with law. 64. The issue arising in ground no.12, raised in assessee"s appeal is regarding short credit for tax deducted at source. 65. As per the assessee, the Assessing Officer / DRP has erred in not granting credit for tax deducted at source to the tune of Rs. 5,19,89,049, even though the relevant TDS certificates were submitted by the assessee during the assessment proceedings. Thus, we direct the Assessing Officer to verify ....
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....sing Officer for decision as per law. 71. We have considered the rival submissions and perused the material available on record. In view of the aforesaid submissions, we deem it appropriate to direct the Assessing Officer to decide the issue of allowability of education cess, as per law. Consequently, the first issue raised by way of additional ground of appeal is allowed for statistical purpose. 72. The next issue raised by the assessee by way of additional ground is regarding claim of deduction under section 10AA of the Act on the basis of commercial profit instead of income from business or profession. 73. During the course of hearing, the learned Sr. Counsel for the assessee submitted that the issue is covered in favour of the assessee by the decision of the Co-ordinate Bench of the Tribunal in Reliance Industries Ltd. v/s ACIT, ITA no.7299/Mum./2017, vide order dated 10.11.2020. 74. We have considered the rival submissions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in Reliance Industries Ltd. (supra), by following the decision of the Hon'ble Supreme Court in Vijay Industries v/s CIT, [2019] 412 ITR 001 (SC),....
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....05.2018 and 17.12.2018 on the remaining transfer pricing additions. We have considered aforesaid revised grounds of appeal filed by the assessee. 78. The issue arising in ground no.17, raised in assessee"s appeal is regarding transfer pricing adjustment in respect of international transaction pertaining to provision of software consultancy services. 79. The brief facts of the case pertaining to ground no.17 as emanating from the record are: The assessee is a leading global information technology consulting services and outsourcing company having worldwide presence. Assessee provides consultancy services, develops and implements products for customers covering on all matters pertaining to implementation of computer software and hardware system, management of data processing and information systems and data communication systems. During the relevant assessment year, assessee entered into following international transactions with its A.Es.: • Lease of Officer Premises • Purchase of Fixed asset • Provision of Software, Technical and Consultancy Services • Availing of services • Interest received on account of loan o....
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....ncy services. The Assessing Officer passed the draft assessment order dated 16.02.2015, inter-alia, on the basis of adjustment proposed by the TPO. The DRP vide directions dated 16.11.2015, inter-alia, rejected the objections filed by the assessee treating the approach of the TPO to be consistent. Being aggrieved, the assessee is in appeal before us. 82. During the course of hearing learned Senior Counsel submitted that the transfer pricing adjustment should limited be to the international transactions only. Learned Senior Counsel further submitted that PLI of gross margin on sales has been affirmed by the Co-ordinate Bench of the Tribunal in assessee"s own case for earlier assessment years. Further, in respect of comparables for benchmarking the transaction, learned Senior Counsel submitted that comparables selected by the CIT(A) in previous assessment years, for North American Region, APAC Region and Europe Region, can be considered and sent to the TPO/AO for verification. On the other hand, learned D.R. vehemently relied upon the orders passed by TPO and DRP. 83. We have considered the rival submissions and perused the material available on record. It has not been disputed....
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....ather the facts on record reveal that the AEs performed the role of risk bearing distributors. It is well brought out by learned Commissioner (Appeals) in his order that the AEs are bearing credit risk and risk of default by client. In fact, the assessee through proper evidences has demonstrated instances where the credit risk with reference to part cancellation of contract has been borne by the AEs without compensation from the assessee. The documentary evidences in this regard furnished by the assessee were thoroughly examined not only by learned Commissioner (Appeals) but they were also produced before us. Thus, from the aforesaid facts, it becomes clear that significant marketing functions are being performed and distribution and marketing risk are being taken by the AEs. On examination of the financials of the subsidiaries it is revealed that some subsidiaries are still making loss at net level which signifies that some risk is being borne by the AEs. It has further been brought on record that the manpower base of AEs performed various functions relating to marketing as well as client co-ordination. The AEs have developed sufficient competency to handle the marketing work inde....
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....by the assessee with foreign comparables and after detailed analysis has shortlisted the final comparables to be considered for comparability analysis. No convincing argument or evidence has been brought on record by the learned Departmental Representative to persuade us to disturb the finding of learned Commissioner (Appeals) on these issues. In view of the aforesaid, we do not find any merit in the grounds raised by the Revenue on the issues. Accordingly, grounds are dismissed." 45. Considering the decision of Tribunal in appeal for AY 2009-10 on identical grounds of appeal, wherein all the contentions as raised by the ld DR for the revenue before us, has been considered by the Tribunal, while affirming the order of ld CIT(A). No variation in facts nor any contrary law is brought to our notice, hence, we uphold the order of ld CIT(A) on this ground of appeal. In the result this ground of appeals raised by revenue are dismissed." 84. Thus, in view of the aforesaid order passed by the Tribunal in assessee"s own case for assessment year 2010-11, the order of the TPO and DRP on the issue of transfer pricing adjustment in respect of provision of software consultancy servic....
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....ions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal in assessee"s own case in Tata Consultancy Service Ltd. v/s ACIT in ITA No. 5713/Mum/2016 for assessment year 2009-10 vide order dated 30.10.2019 following the decision of Hon"ble Jurisdictional High Court in CIT v/s Everest Canto Cylinders Ltd. (2015) 378 ITR 57 directed the Assessing Officer to charge guarantee commission @ 0.5% per annum by observing as under: "43. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. Insofar as the contention of learned Sr. Counsel for the assessee that provision of guarantee is not an international transaction as per section 92B of the Act, we are unable to accept such contention. In our considered opinion, after introduction of Explanation-(i)(c) to section 92B of the Act, with retrospective effect from 1st April 2002, provision of guarantee to AEs has to be considered as an international transaction. Different Benches of the Tribunal have also expressed similar view on the issue. Therefore, we hold that the provision of guarantee to the AEs is an internat....
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.... of software outside India. While claiming the deduction under section 10A of the Act, the assessee reduced this expenditure from both export turnover as well as the total turnover. The Assessing Officer vide draft assessment order dated 16.02.2015, held that the communication expense cannot be reduced from the total turnover while computing the deduction under section 10A of the Act. 96. The DRP vide its directions dated 16.11.2015, allowed objections filed by the assessee following the decision of the Hon'ble Jurisdictional High Court in CIT v/s Gem Plus Jewellery India Ltd., [2011] 330 ITR 175 (Bom.) and directed the Assessing Officer to exclude the communication expenses both from export turnover as well as the total turnover. Being aggrieved, the Revenue is in appeal before us. 97. We have considered the rival submissions and perused the material available on record. We find that this issue is no longer res integra and has been decided in favour of the taxpayer by the Hon'ble Supreme Court in CIT v/s HCL Technologies Ltd., [2018] 404 ITR 719 (SC), wherein the Hon'ble Court held that the expenditure excluded from the export turnover while computing the deducti....
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....ed 16.11.2015 issued under section 144C(5) of the Act rejected the objections filed by the assessee and upheld the findings of TPO to the extent of benchmarking the transaction by applying the interest rate. However, the DRP, following the decision of the Co-ordinate Bench of the Tribunal in VVF Ltd. v/s DCIT (2012) 31 CCH 0474 MumTrib, observed as under: "In the present case, the assessee has charged interest on loans in the range of 4% to 5% by calculating applying the principle of LIBOR plus 300 to 400 basis points. In view of these circumstances, the TPO is directed not to make any further adjustment on this issue. Thus, this ground of objection of the assessee company is accepted and the AO/TPO is directed to modify the draft assessment order accordingly." 101. Being aggrieved by the aforesaid findings of DRP, the Revenue is in appeal before us. During the course of hearing, learned Senior Counsel submitted that the directions of DRP are in conformity with the decision of the Tribunal referred therein. On the other hand, learned D.R. vehemently relied upon the order passed by the TPO. 102. We have considered the rival submissions and perused the material availab....
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....owed for statistical purpose. ITA no.17/Mum./2011 Assessee's Appeal - A.Y. 2006-07 106. In this appeal, the assessee has raised grounds pertaining to the additions made by the Assessing Officer in corporate tax as well as transfer pricing. We will first deal with the issues relating to corporate tax additions. 107. The issue arising in ground no.1, in assessee"s appeal pertains to the disallowance of State taxes paid overseas under section 40(a)(ii) of the Act. 108. Having heard the parties and having perused the material on record, we find that the issue for our adjudication is similar to the issue arising out of ground no.2, raised by the assessee in its appeal being ITA no.1650/ Mum./2016, for assessment year 2011-12. Consequently, our findings given therein shall apply mutatis mutandis to this issue also. Thus, ground no.1, raised by the assessee is allowed for statistical purpose. 109. The issue arising in ground no.2, raised in assessee"s appeal pertains to disallowance of interest / penalty for delayed overseas return filing and delayed payment of overseas advance tax. 110. The brief facts pertaining to this issue, as emanating from the record are: The t....
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....e brief facts of the case pertaining to this issue as emanating from the record are: During the relevant assessment year, the assessee imported software for its business. The software imported were both for internal use in its business as well as for the purpose of trading. The break-up of the same is as under:- iii) Software for internal use Rs. 13,44,29,183 iv) Software for trading purpose Rs. 8,11,24,788 Rs. 21,55,53,971 117. During the course of assessment proceedings, the assessee was asked to show cause as to why the expenditure incurred on import of software should not be disallowed under section 40(a)(i) of the Act as tax at source was not deducted from the payments made to overseas vendors. In reply thereto, the assessee submitted that payment for purchase of software cannot be considered as payment of royalty under section 9(1)(vi) of the Act. Thus, the assessee submitted that there was no withholding tax obligation on the assessee on the payments made to the non-residents as no income was chargeable to tax in India. The Assessing Officer, vide draft assessment order dated 29.12.2009, held that the payment made for import of sof....
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....of agreements entered into by the assessee for import of software was done by the Assessing Officer or the DRP and claim of the assessee was denied merely by referring to judicial precedents and CBDT circular. 121. Thus, in view of the above, in present appeal also we deem it appropriate to restore this issue to the file of Assessing Officer for de novo adjudication after examination of the agreements entered into by the assessee for import of software in light of the law laid down by the Hon"ble Supreme Court in Engineering Analysis Centre for Excellence Pvt. Ltd. (supra). Further, if it is found by the Assessing Officer that the assessee"s case falls within the parameters laid down by the Hon"ble Supreme Court in the aforesaid judgment then payment for import of software be allowed. Needless to mention that before passing the order on this issue adequate opportunity of hearing shall be granted to the assessee. In view of the above, ground no.3 raised in assessee"s appeal is allowed for statistical purpose. 122. Ground no.4, relates to the expenditure incurred for purchase of software within India. During the course of hearing, the learned Senior Counsel expressed his intent....
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....0, for the assessment year 2005-06, observed as under:- "38. With regard to this issue, it is seen that in "Hindustan Unilever Ltd." (supra), the jurisdictional High Court, while dealing with the provisions of section 10B of the Act, the provisions whereof are like those of section 10A, were amended by the Finance Act, 2000, held, that the provisions, post amendment, are for deduction and that u/s 10B, loss in an eligible unit could be set off against the profits of business. The provisions of section 10A and those of section 10B are, mutatis mutandis, undisputedly pari-materia inter- se. Therefore, "Hindustan Unilever Ltd." is squarely applicable to the facts of the present case also. No decision contrary to this jurisdictional High Court judgment has been placed before us. Further, in "Galaxy Surfactants Ltd." (supra), again rendered by the jurisdictional High Court and in the context of section 10B of the Act, it has been held that loss in an eligible unit can be set off against the profits of business. "Hindustan Unilever Ltd." was referred to. 39. Besides, "Yokogawa India Ltd." (supra), according to the assessee, is the assessee's own case, the decision w....
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....grievance of the assessee is accepted." 127. Further, it is now settled by Hon"ble Supreme Court in Yokogawa India Ltd. (supra) that after amendment by Finance Act 2000 with effect from 1-4-2001, section 10A has become a provision for deduction. Thus, respectfully following the judicial precedents cited supra, the Assessing Officer is directed to allow set off of losses of STP units eligible under section 10A of the Act against the taxable business income. Accordingly, the ground no. 5(a) raised in assessee"s appeal is allowed. In view of the above, no separate adjudication is required in respect of ground no. 5(b) being alternative in nature and the same is dismissed as infructuous. 128. The issue arising in ground no. 6 raised in assessee"s appeal is with regard to claim of deduction under section 10A in respect of units on which deduction under section 80HHE of the Act was availed in past. 129. The brief facts of the case pertaining to this issue as emanating from the record are: During the relevant assessment year, the assessee claimed deduction under section 10A in respect of following units for which deduction under section 80HHE of the Act was claimed in the past:- ....
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....dispute that the units in respect of which deduction under section 10A of the Act was claimed by the assessee were not into export of computer software. The only basis for denying the claim of the assessee is that deduction under section 80HHE was previously claimed in respect of such units. We find that on identical issue, the Co-ordinate Bench of the Tribunal vide order dated 04.11.2015, passed in assessee"s own case in DCIT v/s M/s Tata Consultancy Services Ltd., ITA no.7513/Mum./2010, for the assessment year 2005-06 held that old unit of assessee on which deduction under section 80HHE was claimed is entitled to claim deduction under section 10A of the Act from the profits of its units. Revenue"s appeal against the aforesaid order of Co-ordinate Bench was dismissed by the Hon"ble Jurisdictional High Court in ITA No. 1778 of 2016 vide judgment dated 18.03.2019 by observing as under: "6. Section 80HHE of the Act pertains to deduction in respect of profits from export of computer software etc. Sub-section (5) of section 80HHE provides that where deduction under said section is claimed and allowed in respect of the profits of the business referred in sub-section (1) for any....
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....ed to deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive assessment years." 8. As per this proviso, therefore, while computing total income of the undertaking for any assessment year, the profit and gain which had not been included prior to the introduction of Finance Act, 2000, such an undertaking would be entitled to deduction as per sub-section (1) only for the unexpired period of 10 consecutive assessment years. In plain terms, therefore, this proviso would apply to an industry which was already in existence, engaged in manufacturing and export of computer software when the said amendment was made in section 10A. However, such an industry would be eligible to claim that deduction in relation to profit and gain arising out of such activity only for remainder of the period of 10 assessment years, which could be claimed for consequent assessment years alone. 9. If the revenue's interpretation of sub-section (1) of section 10 were to be accepted, then, this proviso would be rendered redundant." 133. As there is no change in facts and circumstances in relevant assessment year, respectfully following the d....
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....Act 2006, w.e.f. 01.04.2007, reads as under: "Explanation 1.-In this section, "assessed tax" means the tax on the total income determined under sub-section (1) of section 143 and where a regular assessment is made, the tax on the total income determined under such regular assessment as reduced by the amount of,- ........... (ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and....." 139. Hon"ble Jurisdictional High Court in CIT v/s Apar Industries Ltd.: [2010] 323 ITR 411, by referring to CBDT (Circular No. 14 of 2006) on 28.12.2006, held that the amendment brought about by the Parliament by the Finance Act, 2006 by substituting the Explanation 1 to section 234B was clarificatory or curative in nature and therefore will have retrospective effect. Thus in view of the aforesaid decision, we direct the Assessing Officer ....
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....cordingly, grounds of appeal in respect of transfer pricing adjustment covered under the MAP were withdrawn and consequently assessee filed revised grounds of appeal vide letters dated 25.05.2018 and 17.12.2018 on the remaining transfer pricing additions. We have considered aforesaid revised grounds of appeal filed by the assessee. 146. The issue arising in ground no.10, raised in assessee"s appeal is regarding transfer pricing adjustment in respect of international transaction pertaining to provision of software consultancy services. Upon consideration of rival submissions and perusal of material on record, we find that this issue raised in assessee"s appeal is similar to ground no. 17 raised in assessee"s appeal being ITA No. 1650/Mum./2016 for assessment year 2011-12. Thus, our findings / conclusion in ground no.17, raised in the assessee"s appeal for the assessment year 2011-12 shall apply mutatis mutandis to this ground also. Accordingly, ground no.10 raised in assessee"s appeal is allowed with similar directions for statistical purpose. 147. The issue arising in ground no. 11 raised in assessee"s appeal is with regard to provision of interest free loans by the assessee ....
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....s AEs in the instant case would enjoy the dividend income and capital gain income which would not be taxed in India." 151. Thus, the TPO concluded that the interest free loans have resulted in benefit to A.E. without any benefit to the assessee and accordingly, made an adjustment of Rs. 4,10,28,373 by adopting rate of interest of 6% based on loan given by the assessee itself to another A.E. The Assessing Officer passed the draft assessment order dated 29.12.2009, inter-alia, on the basis of adjustment proposed by the TPO. The DRP, vide directions dated 29.09.2010 rejected the objections filed by the assessee and upheld the order of TPO/Assessing Officer on this issue. Being aggrieved, the assessee is in appeal before us. 152. During the course of hearing, learned Sr. Counsel submitted that the money was advanced to the subsidiaries as a share capital and therefore cannot be treated as interest free loan. Learned Senior Counsel further submitted that before the loan was granted its objective was clear. By referring to the order of the Tribunal in assessee"s own case for assessment year 2009-10, learned Senior Counsel submitted that similar issue has been restored to the file o....