TaxTMI 
TaxTMI 
2023 (1) TMI 404
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....lution Panel (DRP) further erred in confirming the proposed addition of Rs 22,99,91,344 on account of alleged lower commission charged to Associated Enterprises namely M/s. Morgan Stanley Dean Winter Mauritius Company Limited and M/s. Morgan Stanley & Co. International Limited, United Kingdom. The Appellant therefore prays that the learned AO may be directed to delete the addition as mentioned above and modify the impugned assessment order, accordingly. 2. On the facts and in the circumstances of the case, the learned TPO and the learned AO have legally erred in proposing and the Hon'ble DRP further erred in confirming the proposed addition of Rs 3,71,74,349 on account of disallowance of Overseas Support Services fees paid. The Appellant therefore prays that the learned AO may be directed to delete the addition as mentioned above and modify the impugned assessment order, accordingly. 3. On the facts and in the circumstances of the case, the learned AO has legally erred in proposing and the Hon'ble DRP further erred in confirming the proposed addition on account of disallowance of depreciation of Rs, 6,78,988 on BSE/NSE card. The Appellant therefore prays that the le....
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....les. The Appellant therefore prays that the learned AO may be directed to delete the disallowance of aforesaid expenses and modify the impugned assessment order, accordingly. 9. On the facts and in the circumstances of the case, the learned AO has legally erred in initiating and the Hon'ble DRP further erred in confirming the initiation of penalty proceedings under section 271(1)(c) of the Act on a mere difference of opinion on purely legal issues. The Appellant prays that the learned AO be directed to drop the penalty proceedings initiated under section 271(1)(c) of the Act. Appellant craves leave to add to, alter, amend or withdraw all or any of the grounds of appeal herein above and to submit such statements, documents and papers as may be considered necessary either at or before the earing of this appeal as per law." 3. The assessee vide application dated 23/08/2022 seeks to modify the ground of appeal no.1. The said application and modified ground were taken on record. The modified ground of appeal no.1 reads as under: "Based on the facts and circumstances of the case, in relation to the Ground of Appeal-1, the Appellant respectfully submits the following modifi....
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....s of appeal herein above and submit such statements, documents and papers as may be considered necessary either at or before the hearing of the appeal as per law." 4. The brief facts of the case are: The assessee is engaged in the share broking business and is a member of BSE as well as NSE. For the year under consideration, the assessee filed its return of income on 27/10/2006, declaring a total income of Rs. 113,65,57,515. Pursuant to the reference made by the AO, the Transfer Pricing Officer ('TPO‟) vide order dated 20/10/2009 passed under section 92CA(3) of the Act proposed a transfer pricing adjustment of Rs. 26,71,65,693, to the international transactions undertaken by the assessee. In conformity, the AO passed the draft assessment order assessing the total income of the assessee at Rs. 145,33,10,080, inter-alia, after making various disallowances/additions. The assessee filed detailed objections before the learned DRP against the additions made by the AO/TPO. Vide its directions dated 14/07/2010, issued under section 144C(5) of the Act, the learned DRP rejected the objections filed by the assessee. Accordingly, the AO passed the impugned final assessment order under s....
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....under consideration. 9. On the contrary, the learned Departmental Representative ('learned DR') vehemently relied upon the orders passed by the lower parties. 10. We have considered the submissions and perused the material available on record. We find that the coordinate bench of the Tribunal in assessee's own case in Morgan Stanley India Company Pvt. Ltd. vs Addl. CIT, in ITA No. 2206 and 2320/Mum./2011, vide order dated 22/07/2022, for the assessment year 2005-06, following the judicial precendents in assessee's own case, observed as under: "020. We have carefully considered the rival contentions and perused the orders of the lower authorities. Since, the issue has already been decided by the co-ordinate Bench in assessee's own case for A.Y. 2002-03, which has been followed by co-ordinate Bench in assessee's own case for A.Y. 2004-05, we find no reason to sent the matter back to the file of the learned Transfer Pricing Officer. The co- ordinate Bench has decided the issue as under for A.Y.. 2002-03. For that assessment year the TPO granted an adjustment of marketing cost to the extent of 0.1076% and which is approximately 30% of the weighted average rate charged to 3r....
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.... own case cited supra, we direct the AO/TPO to grant adjustment to the extent of 40% to the assessee while determining the arm's length price of international transaction of brokerage and commission. As a result, ground No. 1.3 raised in assessee's appeal is partly allowed. 12. Insofar as ground No. 1.5 is concerned, learned AR fairly agreed that a similar issue was decided against the assessee by the coordinate bench of the Tribunal in the aforesaid decision for the assessment year 2005-06. Therefore, respectfully following the judicial precedent in assessee's own case, ground No. 1.5 raised in assessee's appeal is dismissed. 13. As regards ground No. 1.4, raised in assessee's appeal is concerned the TPO/AO is directed to grant the benefit of the tolerance range, while computing the arm's length price, in accordance with provisions of section 92C of the Act. As a result, ground No. 1.4 is allowed for statistical purposes. 14. The issue arising in ground No. 2, raised in assessee's appeal, is pertaining to transfer pricing adjustment on account of payment of overseas support fee. 15. The brief facts of the case pertaining to this issue are: For the year under consideration, ass....
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....00-01 to 2002-03, wherein assessee's claim of depreciation on BSE and NSE memberships was allowed. The AO by placing reliance upon the decision of the Hon'ble jurisdictional High Court in CIT vs Techno Shares and Stocks Ltd, 225 CTR 337, disallowed the claim of depreciation on BSE and NSE membership cards. The learned DRP vide directions issued under section 144C (5) of the Act rejected the objections filed by the assessee by following the aforesaid decision of the Hon'ble jurisdictional High Court. Being aggrieved, the assessee is in appeal before us. 19. During the hearing, learned AR submitted that the decision of the Hon'ble jurisdictional High Court, on which reliance was placed by AO and learned DRP, has been overruled by the Hon'ble Supreme Court in Techno Shares and Stocks Ltd vs CIT, (2010) 327 ITR 323 (SC). On the other hand, learned DR vehemently relied upon the order passed by the lower authorities. 20. We have considered the rival submissions and perused the material available on record. In the present case, the assessee claimed depreciation on BSE and NSE membership cards on the basis that the same grant licence to the assessee to carry on broking business on the BS....
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....l do not fall in any category of intangible assets enumerated under section 32(1)(ii) of the Act and thus depreciation on same is not allowable. The learned DRP rejected the objections filed by the assessee against the aforesaid disallowance. Being aggrieved, the assessee is in appeal before us. 23. During the hearing, learned AR submitted that depreciation on the other intangible asset described as goodwill in the financial statement of the assessee has been allowed by the Revenue since the assessment year 2000-01. It was further submitted that there has not been any addition to the intangible asset since the preceding years. 24. On the contrary, the learned DR vehemently relied upon the order passed by the lower authorities. 25. We have heard the rival submissions and perused the material available on record. The assessee on 31/03/1999 acquired intangible assets (i.e. network of clients and empanelment as a broker with various institutions/mutual funds/banks etc.) from JM Shares and Stock Brokers Ltd. As per the assessee, the acquisition of intangible assets has led to an increase in the volume of business of the assessee. For the first time in the assessment year 2000-01, the....
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....er advantages attached to the marketing network under the category of intangible asset as contemplated under section 32(1)(ii) of the Act. Insofar as the decision of Hon'ble jurisdictional High Court in Techno Shares and Stocks Ltd (supra) relied upon by the AO is concerned, the said decision has been overruled by the Hon'ble Supreme Court, as noted above. Thus, we find no basis in upholding the disallowance of depreciation as claimed by the assessee on other intangible assets, which has been allowed to the assessee since the year of acquisition i.e. assessment year 2000-01, particularly in absence of any change in facts and law. Reliance in this regard is also placed on the decision of the Hon'ble Supreme Court in Radhaswami Satsang vs CIT, (1992) 193 ITR 321 (SC). Hence, we direct the AO to grant the depreciation on other intangible assets under section 32 of the Act. Accordingly, ground No. 4 raised in assessee's appeal is allowed. 27. The issue arising in ground No. 5, raised in assessee's appeal, is pertaining to addition on account of disallowance under section 40A(2) of the Act in respect of payment made to Mr Ashith Kampani. 28. The brief facts of the case pertaining to t....
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....ble looking to the legitimate needs of the business. Further, the approval granted under the companies Act cannot use for making disallowance under the income tax Act, for the reason that both the enactments have different objects and reasons. Accordingly, ground no. 3 is dismissed." 30. Thus, respectfully following the judicial precedents in assessee's own case, we direct the AO to delete the disallowance made under section 40A(2) of the Act in respect of payment made to Mr Ashith Kampani. Accordingly, ground No. 5 raised in assessee's appeal is allowed. 31. The issue arising in ground No. 6, raised in assessee's appeal, is pertaining to disallowance under section 14 A of the Act. 32. The brief facts of the case pertaining to this issue are: During the year under consideration, the assessee has received a dividend income of Rs 49,97,281, which does not form part of the total income. Accordingly, during the assessment, the assessee was asked why disallowance under section 14A of the Act should not be made. The AO by applying the provisions of Rule 8D of the Income Tax Rules, 1962 ('the Rules') made the disallowance of Rs 69,04,902 under section 14A r/w Rule 8D. The learned DRP v....
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....essee's own case, we direct the AO to restrict the disallowance under section 14A of the Act to an extent of Rs 1 lakh. Accordingly, ground No. 6 raised in assessee's appeal is partly allowed. 36. The issue arising in ground No. 7, raised in assessee's appeal, is pertaining to disallowance on account of transaction charges and lease line charges under section 40(a)(ia) of the Act. 37. The brief facts of the case pertaining to this issue are: during the year, assessee has paid transaction charges of Rs 2,71,09,628 to BSE/NSE and VSAT, WAN and lease line charges of Rs 33,20,724. The AO held that the aforesaid payments by whatever name called are technical services falling within the purview of section 194J and therefore liable for deduction of tax. Since the assessee has failed to deduct and pay the tax on such payment, the AO disallowed the amount of Rs 3,04,30,352 under section 40(a)(ia) of the Act. The learned DRP vide directions issued under section 144C(5) of the Act rejected the objections filed by the assessee against the aforesaid addition. Being aggrieved, the assessee is in appeal before us. 38. Having heard both sides and perused the material available on record, we fin....
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....of vehicles. 41. The brief facts of the case pertaining to this issue are: During the year under consideration, the assessee paid lease rental of Rs. 14,61,606 in respect of vehicles used by its employees in the grade of VP and executive director. Since lease vehicles were used for the purpose of business, the assessee had claimed a deduction of lease rentals of Rs 40,61,606. During the assessment proceedings, the assessee was asked to explain why lease rental on vehicles should not be disallowed. In response thereto, the assessee submitted that the assessee has used vehicles required under a finance lease. As per accounting standard 19, on 'leases' issued by the ICAI, the assessee has recognised this as an asset and a corresponding liability created as if the asset has been acquired on credit. The lease rentals paid by the assessee are broken up into the principal amount and the interest amount. The principal amount embedded in the lease rentals is debited to the liability and the interest amount is debited to the profit and loss account. In the books of accounts, the assessee is also claiming depreciation in respect of the asset recognised for the leased vehicles. However, Circu....