TaxTMI 
TaxTMI 
2022 (8) TMI 1452
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....ons of the Learned Dispute Resolution Panel ('Ld. DRP') is bad in law and void ab initio. 2. The Ld. AO/Ld. DRP have erred, in law and on the facts and circumstances of the case, in making an upward adjustment of INR 16,24,323 to the total income of the Appellant pertaining to the international transaction of notional interest on outstanding receivables. 3. The Ld. AO/Ld. DRP have erred, in law and on facts and circumstances of the case, by: a. Treating outstanding receivables from Associated Enterprises ('AEs') as a separate international transaction; b. Re- characterizing outstanding receivables from AE as a deemed loan advanced to AE; and c. Inappropriately applying a mark-up of 400 basis points on LIBOR on an ad-hoc basis (Without prejudice to other arguments) d. Not considering 90 days as credit period allowed to AEs while computing notional interest on receivables by disregarding the credit period mentioned in the inter-company agreement. In doing so, the Ld. DRP also failed to acknowledge that the 90 days credit period has been accepted by the Ld. TPO in the TP order as well as the by the Ld. DRP in Appellant's own case f....
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....ertaining to Convergys Stream and Convergys Infowavz, which were taken over by the Appellant pursuant to their amalgamation with the Appellant. 10. That on the facts and in the circumstances of the case and in law, the Ld. AO erred in computing and levying interest under Section 234A of the Act amounting to INR 60,74,452. 11. That on the facts and in the circumstances of the case and in law, the Ld. AO erred in computing and levying interest under Section 234B of the Act amounting to INR 18,22,33,560 which is consequential in nature. 12. That on the facts and in the circumstances of the case and in law, the Ld. AO erred in computing and levying interest under Section 234C of the Act amounting to INR 11,21,037. 13. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under 271(1)(c) of the Act mechanically and without appreciating that the Appellant has neither concealed any income nor has it furnished inaccurate particulars relating to any income." 3. Delay of 25 days condoned owing to reasonable cause - Covid. 4. The assessee, Convergys India, is a wholly owned subsidiary....
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....Limited (ITA No. 40/2017) wherein the Hon'ble Rajasthan High Court has affirmed the order of the Tribunal wherein it was held that the transaction of allowing credit period to the AE for realization of its sale proceeds is not an independent international transaction but is closely linked with the sale transactions of the AE. 16. Hence, we hereby allow the appeal of the assessee on this ground is allowed." 7. In the absence of any change in the material facts and the legal proposition, we decline to deviate from the earlier order of the Tribunal. The appeal of the assessee on this ground is allowed. Deduction u/s 43B: 8. The assessee being the legal successor claimed deduction amounting to Rs.1,49,07,493/- under section 43B of the Act in its return of income in respect to discharge of liabilities that were taken over from Convergys Stream and Convergys Infowavz pursuant to their amalgamation with the Assessee. The liabilities that were taken over were in the nature of Leave Encashment, Bonus, Gratuity and Professional Tax liabilities. 9. The aforesaid claim under section 43B of the Act was duly certified by the Tax Auditor in Tax Audit Report (TAR) in Claus....
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....e right should be recognized in the transferee. It is merely an incident flowing from the transfer of the business, together with its assets and liabilities, from the previous owner to the transferee. It is a right which should, on a proper appreciation of all that is implied in the transfer of a business, be regarded as belonging to the new owner. It is not imperative that the assessee referred to in sub-clause (a) must necessarily mean the identical assessee referred to in subclause (b). A successor to the pertinent interest of a previous assessee would be covered within the terms of sub-clause (b). The successor assessee, in effect, steps into the shoes of his predecessor. Unless the language of the statute plainly and clearly compels a construction to the contrary, the normal rule of the law should be given its proper play. 14. We cannot concur with the observation by the ld. DRP. The liabilities that were taken over by the assessee were in the nature of Leave Encashment, Bonus, Gratuity and Professional Tax and thus, fall within the ambit of section 43B of the Act. Accordingly, we hold that the assessee is eligible to claim deduction u/s 43B of the Act in ....
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....e / par value of each equity share of Digital Think stood altered at INR 250 per share from INR 10 per share and consequently, the number of issued and paid-up equity shares of Digital Think reduced to 15,565 shares. 19. During the course of assessment, the assessee submitted all the above information to the AO with explanation and justification that the above shares on October 9, 2015 were acquired at a share price which was at fair market value (FMV) at Rs.242.30, therefore, no addition was warranted under section 56(2)(viia) of the Act. 20. The AO observed that no audited financial statements were prepared at the time of valuation of shares on July 31, 2015 and thus, contended that the veracity of the valuation report could not be established. Further, it was held that soon after the purchase of shares of Digital Think, the face value of the shares was increased from INR 10 per share to INR 250 per share. Hence, the AO proposed an addition of Rs.31,00,122/- [(Rs.250 - Rs.242.03) 3,88,974 shares] to the total income of the Appellant under section 56(2)(viia) of the Act. 21. The ld. DRP has concurred with the view of the AO and observed that the entire valuation was a mak....