TaxTMI 
TaxTMI 
2021 (7) TMI 1466
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....extent of Rs. 2,49,32,201/-. 2. The learned CIT(A) has erred both in law and on the facts of the case in holding that the authorized representative of the appellant gave concession of law which is binding on the assessee. 3. The learned CIT(A) has erred both in law and on the facts of the case in failing to appreciate that the learned ITAT had remitted the file to the AO for "fresh examination" of the claim as per law. 4. The learned CIT(A) has erred both in law and on the facts of the case in holding that the decision of Liberty India is applicable whereas the same has no application in the present case. 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld.AO in levying interest u/s.234A/B/C/D of the ....
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....l for 100% EOU was granted in the middle of the year i.e. 1st November 2002. iii. If other income shown by the assessee are excluded for working out the exemption under section 10B of the Act, the income of the assessee from the eligible unit becomes negative. Thus there is no question for claiming or allowing the exemption under section 10B of the Act. 3.4 In view of the above, the AO denied the exemption claimed by the assessee under section 10B of the Act and assessed the income in the assessment framed under section 143(3) read with section 254/260B vide order dated 15th December 2008 determining the total income at Rs. 4,16,41,810/- only. 3.5 On appeal, the learned CIT (A) vide order dated 30th November 2009 held that the assessee is eligible for exemption under section 10B of the Act with effect from 1st November 2002. Meaning thereby that the assessee is not eligible for deduction with respect to other income accrued or arise for the period 01-04-2002 to 31-10-2002 for deduction under section 10B of the Act. However the ld. CIT-A was pleased to grant exemption under section 80IB and 80HHC for pre EOU period income subject to verification and fulfilment of condition there....
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....ssue to the file of the AO for fresh examination after considering the other income between the pre and post EOU period on the basis of the case laws cited by the ld. AR. The relevant finding of the ITAT reads as under: From the table it is seen that Assessee has bifurcated the income into 2 periods up to the period of granting of EOU status and subsequent to it. We are of the view that these factual aspect needs verification at the end of A.O. We therefore remit the issue to the file of A.O for fresh examination of the claim of Assessee, the bifurcation of income into 2 period in the light of the decisions cited reasonable opportunity of hearing to the Assessee. The Assessee shall be at liberty to furnish additional evidence before A.O. Thus this ground is allowed for statistical purposes. 5.3 In the 3rd round of litigation, the AO in the assessment framed under section 143(3) read with section 254 of the Act vide order dated 7th October 2015 denied the exemption with respect to the other income aggregating to Rs. 6,00,87,989/-only. The breakup of such other income stands as under: Other Incomes DEPB Rs. 2,41,94,222/- DEPB Difference Rs. 1,80,270/- Duty Draw Ba....
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.... by the ITAT vide order dated 7th March 2014 in ITA Nos. 814 & 1035/AHD/2010. Therefore, such income cannot be considered as eligible income from the eligible unit at the level of the learned CIT (A). Thus the learned CIT (A) allowed the partly relief to the assessee. 8. Being aggrieved by the order of the learned CIT (A), both the assessee and the revenue are in appeal before us. The assessee is in appeal against the direction of the learned CIT (A) for not allowing the exemption with respect to DEPB, duty drawback and DEPB rate difference aggregating to Rs. 2,49,32,201/- whereas the Revenue is in appeal against the direction of the learned CIT (A) for allowing the exemption with respect to the other income pertaining to the post EOU period in the ratio of export turnover to total turnover. The ground of appeal of the Revenue in ITA number 2295/Ahd/2016 for A.Y. 2003-04 read as under: 1. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance made u/s.l0B treating the excise duty refund (M), excise duty refund (T), bank interest, quality difference income, discount income holding it eligible as profits of the business undertaking for computing the disallowance ....
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.... issue against the assessee. 11. The learned AR in respect of the appeal filed by the Revenue contended that the issue for allowing the exemption under section 10B of the Act after considering income in the ratio of export turnover and total turnover has been decided in favour of the assessee in the judgments as given under: i. PCIT vs. Dishman Pharmaceuticals and Chemicals Ltd. in Tax Appeal No- 129 of 2019 (Guj) ii. Maral Overseas Ltd vs. ACIT (2012) 136 ITD 177(Indore) (SB) iii. Sonic Technology India Inc. vs. ITO in ITA No. 2665 & 2720/Ahd/2011 12. Both the learned AR and the DR before us vehemently supported the order of the authorities below to the extent favourable to them. 13. We have heard the rival contentions of both the parties and perused the materials available on record. The 1st question that arises for our adjudication whether the other income shown by the assessee in its eligible undertaking is entitled for the exemption under section 10B of the Act. The provisions of subsection 1 of section 10B of the Act provides that a deduction will be available to a 100% EOU for the profit derived from the export of articles or things or computer software for a period....
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.... computing the profits derived by the undertaking from export. [Para 78] Thus, sub-section (4) of section 10B stipulates that deduction under that section shall be computed by apportioning the profits of the business of the undertaking in the ratio of turnover to the total turnover. Thus, notwithstanding the fact that sub-section (1) of section 10B refers the profits and gains as are derived by a 100 per cent EOU, yet the manner of determining such eligible profits has been statutorily defined in sub-section (4) of section 10B. As per the formula stated above, the entire profits of the business are to be taken which are multiplied by the ratio of the export turnover to the total turnover of the business. Sub-section (4) does not require an assessee to establish a direct nexus with the business of the undertaking and once an income forms part of the business of the undertaking, the same would be included in the profits of the business of the undertaking. Thus, once an income forms part of the business of the eligible undertaking, there is no further mandate in the provisions of section 10B to exclude the same from the eligible profits. The mode of determining the eligible deduct....
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....t recording the concession of the learned AR that the income namely DEPB, Duty Drawback and DEPB rate difference income are not eligible for deduction under section 10B of the Act. The relevant finding of the ITAT has already been reproduced in the previous paragraph. 13.6 A question also arises for a consideration whether the tribunal was supposed to give the independent finding with respect to the dispute where the assessee does not agitate. Under the normal circumstances, the ITAT does not give any finding based on reasons with respect to the disputes not agitated by the counsel of the assessee. However, it is also pertinent to note that the ITAT in the same order has also observed that certain issues stand in favour of the assessee but the ld. CIT-A has not just followed the same blindly by allowing the same but adjudicated the same on merit in his order. Thus in the light of above discussion, we hold that the ITAT in his order on the previous occasion has not decided the issue on merit, just remitted the same to the AO for de-novo adjudication. 13.7 In view of the above we direct the AO to allow the exemption to the assessee with respect to DEPB, Duty Drawback and DEPB rate ....
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....enditure incurred in relation to public issue cannot be denied to the Appellant. 4. The Id. CIT(A) has erred in law and on the facts of the case in confirming the action of Id. AO in disallowing an amount of Rs. 48,85,261/- being provision for diminution in value of investment. 5. The Id. CIT(A) has erred in law and on the facts of the case in confirming the action of Id. AO in not granting full claim of deduction u / s 10 B of the Act in totality at Rs. 11,02,89,592/- as claimed by the assessee. 6. The Id. CIT(A) has erred in law and on the facts of the case in confirming the action of Id. AO in excluding duty draw back income of Rs. 97,35,571/- from export profit to determine eligible profit for deduction u/s 10B of the Act. 7. The Id. CIT(A) has erred in law and on the facts of the case in confirming the action of Id. AO in allocating expenditure of Rs. 1,13,34,211/-pertaining to Non-EOU unit to the EOU unit and accordingly both the lower authorities erred in law in reducing the profit to that extent form export profit to determine eligible profit for deduction u/s 10B of the Act. 8. Ld. CIT(A) has erred both in law and on facts of the case in not appreciating that the....
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....alized in the books of accounts. 19.1 It was contended by the assessee that the fees paid to SBI Capital Market Ltd does not fall within the nature of expenses as provided under section 35D of the Act. Therefore, the assessee treated the consultancy fee as revenue in nature. Without prejudice to the above, the assessee also contended that the expenses incurred in connection with the issue of shares are revenue in nature as held by the Hon'ble Madras High Court in the case of CIT vs. Southern Petrochemicals Industries Corporation Ltd. reported in 311 ITR 202. 19.2 However, the AO found that the impugned expenses were incurred by the assessee for the purpose of the study of the capital market which was conducted before the issue of IPO. Therefore, such expenses were incurred in connection with the raising of funds through the issue of shares. Therefore, the same cannot be treated as revenue in nature and the same needs to be capitalized in the books of accounts. The AO in holding so has placed reliance on various judgments which are recorded in para 5.4 on page 9 of his order. Accordingly, the AO disallowed the claim of the assessee by treating the impugned consultancy fee as capi....
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.... are revenue in nature and therefore the same are allowable under the provisions of section 37(1) of the Act. The provisions of section 37(1) of the Act states that any amount of expenditure not being capital or personal in nature incurred wholly and exclusively for the purpose of the business shall be allowed as deduction. However, the onus lies upon the assessee to satisfy the conditions imposed under section 37(1) of the Act. However the ld. AR before us has not demonstrated based on the documentary evidence the purpose for which such expenditure has been incurred. On perusal of the order of the AO, we note that such expenditure has been incurred for study of capital market in connection with IPO. Therefore, in our considered view the same cannot be allowed as deduction by treating the same as revenue expenses under the provisions of section 37(1) of the Act. 25.1 The next controversy arises whether the impugned expenditure pertains to the previous year 2006-07 as alleged by the learned CIT (A). Admittedly, the expenditure was incurred in the earlier year but the same was claimed as deduction in the year under consideration. However, there is no loss to the revenue in a situati....
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....ntion is drawn to sub-clause (iv) to clause (c) to subsection 2 of section 35D of the Act which reads as under: (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of the following clauses, namely :- (a)******* (b)******* (c) where the assessee is a company, also expenditure- (i) ***** (ii) ***** (iii) *** (iv) in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus; 25.4 The above clause has been interpreted by the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Shree Synthetics Ltd. reported in 162 ITR 819 that such list of the expenses is illustrative nature. As such all the expenses incurred in connection with the issue of shares since beginning till the completion of the IPO are eligible for deduction under 35D of the Act. The relevant extract of the judgment reads as under: The word 'being' has been used in section 35D(2)(c )(iv) by way of illustration and is not restricted only to the words 'underwriting commission, brokerag....
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....rather, he conceded the order of the authorities below. However, the learned AR before us pleaded that as a result of disallowance of the claim of the assessee, the benefit provided under section 10B of the Act should be allowed on the enhanced income on account of such addition. 31. On the other hand, the learned DR vehemently supported the order of the authorities below. 32. We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of section 10B of the Act provides a deduction to an eligible undertaking with respect to the profit and gains derived from the export of articles or things or computer software. Admittedly, the assessee in the case on hand is maintaining more than one undertaking as pointed out by the AO in his order: The assessee has three manufacturing units of which one is an EOU and the export profits of this unit are being claimed exempt under section 10B. the requisite certificate in form no56G has been filed during the course of assessment proceedings. 32.1 Now the 1st question that arises whether such investment was made by the assessee in the undertaking eligible for deduction under section 10B ....
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....ble undertaking. 34.2 On question by the AO, the assessee agrees to allocate the expenses of the sister concern in the ratio of productions carried out by eligible and non-eligible unit. The assessee further worked out an expense of Rs. 1,13,34,211/- attributable to the eligible unit in the letter dated 16th December 2010. Accordingly the AO allocated the expenses to the extent of Rs. 1,13,34,211/- to the eligible unit while working out the deduction under section 10B of the Act. 35. Aggrieved assessee preferred an appeal to the learned CIT (A). 36. The assessee with respect to the Duty Drawback income of Rs. 97,35,571/- contended that it has not claimed any double deduction and therefore the same should be accepted in toto as shown in form 56 G issued by the chartered accountant. 36.1 The assessee with respect to the allocation of the expenses of the sister concern namely Survin Laboratories for Rs. 1,13,34,211/- of the eligible unit contended that it is maintaining separate income and expenditure account of its all the units being 3 in numbers. Furthermore, the assessee has not incurred any expense in the unit of sister concern attributable to the eligible undertaking. 36.2....
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.... pages 94 to 97 of the paper book where the certified form 56 G was placed. 38.2 Regarding the apportionment of the expenses of the sister concern namely Survin Laboratories, the learned AR contended that it is engaged in providing spray Roy plants services which is not required by the eligible undertaking. Furthermore, the sister concern is preparing separate income and expenditure account. Accordingly, the learned AR contended that the impugned expenditure cannot be allocated to the eligible undertaking. 39. On the other hand the learned DR vehemently supported the order of the authorities below. 40. We heard the rival contentions of both the parties and perused the materials available on record. It was alleged by the Revenue that the assessee has claimed double deduction with respect to the other income of Rs. 97,35,571/- being Duty Drawback. For this purpose, we have referred form 56 G certified by the chartered accountant placed on pages 94 to 97 of the paper book. On perusal of the same we note that, the profit of the eligible undertaking has been computed by taking the turnover of the eligible undertaking. From this turnover there were various deduction made in form 56 G....
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.... before us is contrary to the finding of the authorities below. 40.4 That as may be, the learned AR before us prayed to provide one more opportunity to the assessee to justify its stand that the expenses incurred by the sister concern are not attributable to the eligible undertaking. The prayer of the learned AR was not objected by the learned DR appearing on behalf of the Revenue. Accordingly in the interest of justice and fair play we are inclined to remit the issue to the file of the AO for fresh adjudication de novo to this extent in accordance to the provisions of law. Hence, the ground of appeal of the assessee is allowed for the statistical purposes. 41. The next issue raised by the assessee in ground No. 9 is that the learned CIT (A) erred in confirming the order of the AO by making addition to the book profit computed under section 115JB of the Act for Rs. 48,85,261/- on account of provision for diminution in the value of assets. 42. The assessee in its profit and loss account has shown provision for diminution in the value of investment amounting to Rs. 48,85,261/- only which was added to the total income of the assessee/ book profit computed under normal computation ....
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....R 55 wherein it was held as under: "With insertion of clause (i) to the explanation with retrospective effect, any amount or amounts set aside for provision for diminution in the value of the asset made by the assessee, would be added back for computation of book profit under section 115JB of the Act. However, if this was not a mere provision made by the assessee by merely debiting the Profit and Loss Account and crediting the provision for bad and doubtful debt, but by simultaneously obliterating such provision from its accounts by reducing the corresponding amount from the loans and advances on the asset side of the balance sheet and consequently, at the end of the year showing the loans and advances on the asset aside of the balance sheet as net of the provision for bad debt, it would amount to a write off and such actual write off would not be hit by clause (i) of the explanation to section 115JB." 47.1 It was contended by the learned AR at the time of hearing that the assessee has written off such diminution in the value of assets against the investments. The learned AR has not brought anything on record contrary to the arguments advanced by the learned AR for the assessee.....
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....n not reducing income of Rs. 5,46,37,200/- offered for tax in AY 2009-10 under the normal provisions of the Act from the book profit while calculating MAT for the year under consideration. Ld.CIT(A) failed to appreciate that this income has already been taxed under the normal provisions of the Act in earlier year and therefore the same cannot once again be taxed under the provisions of MAT for the year under consideration. 6. The learned CIT(A) has erred in law and on the facts of the case in disallowing advertisement, consultancy, stationery and travelling expenses in relation to IPO, amounting to Rs. 23,93,179/- u/s.35D of the Act. 7. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 8. The ld.CIT(A) has erred in law and on facts of the case in confirming action of the ld.AO in levying interes....
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....exceeds the amount of investment. This fact can be verified from the Balance Sheet of the assessee. The relevant page of the Balance Sheet, placed on page number 7/Y of paper book, is extracted below: Balance Sheet as at 31st March, 2010 Particulars Annexure As At 31.03.2010 (Rs.in Lacs) As At 31.03.2009 SOURCES OF FUNDS: Capital & Liabilities: Share capital A 1500.01 1500.01 Reserves & Surplus B 13022.59 10795.66 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Investments F 11826.74 1660.42 56.2 In view of the above, it can be presumed that the assessee has used its own fund in the impugned investment and therefore there cannot be any disallowance on account of interest expenses. Regarding this the Hon'ble Courts have held that where own interest free fund of the assessee is sufficient enough to meet the investment then no any disallowances on account of interest is warranted under section 14A r.w.r. 8D of the Act. In this respect we draw support from the judgment of Hon'ble jurisdictional High Court in the case of CIT vs. Torrent Power Ltd reported in 363 ITR 474 where it was held as ....
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....nce of the administrative and interest expenses, if any, then it should be lower of exempted income or the disallowance made under section 14A r.w.r. 8D of Rules of Income Tax Rules. Accordingly, we confirm the disallowance made by the AO which was subsequently confirmed by the learned CIT (A) towards the administrative expenses. Thus the grounds of appeal raised by the assessee is partly allowed. 57. The 2nd issue raised by the assessee in ground No. 3 is that the learned CIT (A) erred in confirming the order of the AO by treating the rental income as the income from other sources and thereby disallowing the deduction claimed under section 24 of the Act for Rs. 2,94,000/- only. 58. The assessee in the year under consideration has declared rental income of Rs. 9,80,000/- and claimed the standard deduction under section 24 of the Act for Rs. 2,94,000/- being 30% of the rental amount. However the AO found that the assessee has let out the open plot of land on which a shed was constructed by the tenant. Accordingly he was of the view that the impugned rent has been received by the assessee from letting out the plot of land without having any building. Therefore, such rent cannot be....
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....ived for the letting out of land not shades or building. Thus in our humble understanding, the impugned rent cannot be treated as income from building or shades for the reason that what was let out is an open land not the building or shades. In this regard we draw support and guidance from the order of the Hon'ble Punjab and Haryana High Court in case of Govardhan Dass & Sons Vs. CIT reported in (2007) 158 Taxmann 465 (P&H) where the Hon'ble Court held as under: "It was clear from the statement of case that what was let out was kutcha plinths on open land, which by no stretch of imagination could be termed as house property. The property in question, from which income was derived, was neither building nor land appurtenant thereto within the meaning of section 22. [Para 6] A plain reading of section 22 provides that it is the income from property consisting of any 'building' or 'land appurtenant thereto' which is assessed under section 22 and not the income from renting out of open land or some kutcha plinth only. In the instant case, no building having been let out, there was no question of treating the rent received for letting out of land only as income from h....
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....ned CIT (A) to the extent of exempted income. 71.1 However, we note that in the recent judgment of Special Bench of Hon'ble Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd. reported in 82 Taxmann.com 415 has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the book profit u/s 115JB of the Act. The relevant portion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962." 71.2 The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case on hand. Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 71.3 However, it is also important to note that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f) to section 115JB of the Act while determining th....
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....B of the Act independently. But now we note that since there is no mechanism provided under the clause (f) to Explanation-1 of Sec. 115JB of the Act to make the disallowance independently, therefore our action for restoring back the issue to the file of AO would unnecessarily cause further litigation. Thus we limit the disallowance on an ad-hoc basis @ 1 % of the exempted income as per the clause (f) to Explanation-1 of Sec. 115JB of the Act. Thus the ground of appeal of the assessee is partly allowed. 72. The next issue raised by the assessee in ground No. 5 was not pressed. So we accordingly dismiss the same as not pressed. 73. The next issue raised by the assessee in ground No. 6 is that the learned CIT (A) erred in confirming the disllowance of ceratin expenses namely advertisment, consultancy, stationary and travelling out of calim made under section 35D of the Act. 74. The necessary fact of the issue on hand is that the assessee made public issue of shares in order to finance its new project. In the process of IPO the assessee incurred certain expenses and treated them as preliminary expenses under section 35D of the Act. However the assessee missed out to claim the deduct....
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....of the I. T. Act, 1961. Since the provisions of section 40(a)(ia) of the I.T. Act are attracted on the payments towards various expenditures amounting to Rs. 23,93,179/- and hence disallowance of these expenditures to the extent of an amount of Rs. 23,93,179/- is upheld and same is reduced from the total claim of expenditure u/s. 35D of the I. T. Act as mentioned above. It has been noticed that in the appellate proceedings, the appellant has claimed the deduction @ 20% every year in view of the provisions of section 35D{2) of the I. T. Act, 1961, since the AO has not given any observations about the rate of allow ability of the same i.e. @ 20% or the 10% every year and hence, the AO is directed to allow the claim in view of the provisions of section 35D of the . T. Act, 1961 after necessary verification. In result, the claim of deduction u7s. 35D of the Act made through the additional ground of appeal is partly allowed. 76. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 77. The learned AR before us contended that all the expenses in dispute have been incurred only for the purpose of the IPO. Likewise, the payments were made through the ba....
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....ntention by the learned AR, we find force in the argument advanced by the Learned AR that if the recipient of consultancy and advertisement fees has paid the taxes on the amount received from the assessee, then there will be no any disallowance warranted under section 40(a)(ia) of the Act. Indeed the said provision, though inserted by the Finance Act 2012 w.e.f. 1-4-2013, has been held to be retrospective in operation by recent decision of the Hon'ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. (2015) 61 taxmann.com 45 (Del) wherein the question raised before the court and the decision rendered thereon is reproduced herein below for the sake of clarity:- "Question: Whether the second proviso to Section 40(a)(ia) (inserted by the Finance Act, 2012), which states that TDS shall be deemed to be deducted and paid by a deductor if resident recipient has disclosed the amount in his return of income and paid tax thereon, is retrospective in nature or not?" Held: Section 40(a)(ia) was introduced by the Finance (No.2) Act, 2004 to ensure that an expenditure should not be allowed as deduction in the hands of an assessee in a situation where income embedde....
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....o whether the penalty is levied for concealment or furnishing of inaccurate particulars of income. Such a defect renders the penalty void ab initio and is also a violation of the principles of natural justice. 2. The learned CIT(A) has erred in law and on facts in confirming the action of AO in initiating and levying penalty under section 271(l)(c) of the Act without recording mandatory satisfaction as contemplated under the Act at the time of framing the assessment order. 3. The learned CIT(A) has erred both in law and on the facts of the case in confirming the penalty of Rs. 88,200/- levied u/s 271(l)(c) of the Act on disallowance of standard deduction of Rs. 2,94,000/- claimed from income from house property after treating it as income from other sources. 4. In any case, the impugned penalty order is barred by limitation and thus without jurisdiction and illegal. 5. In any case, quantification of the penalty is erroneous and excessive. 6. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explained and information submitted by the appellant from time to time which oug....
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....sessee under the bona fide belief has shown rental income under the head house property and therefore the deduction under section 24 of the Act was claimed. Accordingly the ld. AR contended that there cannot be any penalty under the provisions of section 271(1)(c) of the Act. 88. On the other and the learned DR vehemently supported the order of the authorities below. 89. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates to the penalty imposed by the AO under section 271(1)(c) of the Act which was subsequently confirmed by the learned CIT (A). The assessee in his return of income has made a claim of the standard deduction under section 24 of the Act against the rental income from the letting of land. It was contended that the building was constructed on the land by the tenant, therefore the assessee was of the view that the impugned land was appurtenant to building. So, the impugned rent is chargeable to tax under the hand House Property. Admittedly, land cannot be equated with the house property and therefore any income accrued to the assessee from letting of such land is chargeable to tax ....
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....shares is a valid consideration and hence for the Goodwill Portion, the assessee was allotted shares in the public limited company should have to be treated as valid consideration for the transfer of Goodwill together with other assets and liabilities. Reliance in this regard is placed on the decision of Hon'ble Kerala High Court in the case of the Commonwealth Trust India Ltd. v. CIT [2008] 173 Taxman 379/306 ITR 356. We find from the materials available on record that the entire facts relating to the said issue and which are material to the computation of total income were duly disclosed by the assessee before the ld AO. No explanation furnished by the assessee was found to be false by the ld AO. It was only a genuine difference of opinion between assessee and the ld AO in not allowing the claim of exemption u/s 47(xiv) of the Act. 3.5.2 We find that the ld CITA had also given the finding that the explanation given by the assessee was bonafide and in that regard had observed as under which are crucial for determining the penalty dispute before us. These findings are not controverted by the revenue. The observations of the ld CITA in this regard are as under:- "A claim o....
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....n it was held that when no information given in the return was found to be incorrect or inaccurate or the details supplied by the assessee was found to be factually incorrect, then primafacie, the assessee cannot be held guilty of furnishing inaccurate particulars. It may at best result in making incorrect claim in law. The Hon'ble Apex Court further observed that by any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. It held that merely because a claim made by the assessee is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Accordingly, by placing reliance on the said decision of Hon'ble Supreme Court in Reliance Petroproducts (P.) Ltd.'s case (supra) we hold that the ld CITA had rightly deleted the penalty in respect of denial of exemption u/s 47(xiv) of the Act on self -generated Goodwill portion partially. Accordingly, we do not find any infirmity in the order of the ld CITA. 89.2 Accordingly, we are of the view that there cannot be any penalty under the provisions of section 271(1)(c) of the Act in the given facts and circum....
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....e and the consequential orders are bad and illegal because the alleged approval granted by CIT u/s.92CA(1) of the Act is vitiated in law firstly because the appellant was not heard before any such approval and secondly because the same has been granted mechanically without any application of mind and without due diligence. 9. The learned CIT(A) has erred both in law and on the facts of the case in confirming the action of AO in disallowing professional fees of Rs. 31,00,093/- u/s.37(1) of the Act after treating it as capital expenditure. 10. Both the lower authorities have passed the orders without properly appreciating the fact and that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 11. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld.AO in levying interest u/s.234A/B/C/D of the Act. 12. The learned CIT(A) has erred in law and on facts of the ....
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....ntee on loan taken by its Associated Enterprises based in Singapore for Rs. 100 crore in the immediate preceding A.Y. 2010-11 which is continuing in the year under consideration as well. The TPO also found that the assessee, in the A.Y. 2010-11, charged guarantee fee for Rs. 1,88,42,093/- whereas no guarantee fee charged in the year under consideration. Therefore, the TPO issued SCN to the assessee for computing ALP with respect to such bank guarantee. 99. In response assessee submitted that it was in the process of acquiring Dystar Textifarben GMBH & Company based in Germany and other Dyster group company. For this purpose a special purpose vehicle company namely M/s Kiri Holding Singapore Pvt. Ltd. was setup as 100% subsidiary of the assessee. The AE M/s Kiri Holding Singapore Pvt. Ltd. in order to acquire Dystar group has procured loan from banks in Singapore against which it (the assessee) has given corporate guarantee without involving any bank. Thus no guarantee charges was paid either to any banker or third party by it (the assessee). However, it charged guarantee fee of Rs. 1,88,42,093/- in the preceding A.Y. 2010-11 suo-moto. Subsequently, the Board of directors of both ....
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....LP. Therefore the reliance placed on the judgment of SA Builder Ltd (supra) by the assessee is not acceptable. (ii) The extension of corporate guarantee to AE falls within the ambit of service as the same is also recognized by the OECD commentary and therefore needs to be benchmarked. This view was also confirmed by the US tax court in case of Container Corporation vs. Commissioner as well as by Canadian Tax Court in case of General Electric (GE) dated 4th December 2009 and also by Mumbai ITAT in case of Nimbus Communications Ltd. reported in [2013] 34 taxmann.com 298. (iii) In transaction of guarantee there is always a cost inherent in the form of administrative expenses, maintenance of appropriate level of cash & cash equivalent, capital, standby credit line to cope up with the risk associated with guarantee. These costs need to be covered by charging fee on such guarantee. 99.5 The TPO in view of the above held that the guarantee extended by the assessee in favour of its AE i.e. M/s Kiri Holding Singapore Pvt. Ltd. is an international transaction in the nature of services and need to be benchmarked. In order to benchmark the guarantee fee, the TPO analyzed the bond data in ....
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....IT reported in 43 taxmann.com 150. 100.3 The assessee alternatively contended that in any case the corporate guarantee fee should be taken @ 0.5 % on the value of bank guarantee. 101. The ld. CIT (A) allowed the alternative appeal of the assessee by observing as under: In view of the aforesaid discussion and the decisions of various authorities referred above, it would be fair and reasonable to restrict the upward adjustment to 0.5% as against the AOs determination at 4.37%. In fact. 4.37% taken by the AO does not have any basis and it was equivalent to the interest rate which is far from the fact as the appellant has not provided any loans but the guarantee which did not involve any expenditure on the part of the appellant not any monetary benefits in the hands of the recipient AE. In result, the upward adjustment to the extent of Rs. 50,00,000/- is worked out and the same is confirmed. Relief is granted for the balance amount. 102. Being aggrieved by order of learned CIT (A), both the assessee and the Revenue are in appeal before us. The assessee is in appeal against the confirmation of the addition for Rs.50 lakhs on account of such corporate guarantee whereas the Revenue....
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....uarantee is covered by the definition of international transaction u/s 92B has been settled by the order of this Tribunal in case of Micro Ink Ltd vs. ACIT (63 taxmann.com 353). In the said order it was decided by the Hon'ble bench that guarantees is included in the definition by way of insertion of Explanation to section 92B of the Act which is for the residuary clause of the definition under section 92B of the Act. As such it will be only hit by the explanation when the guarantee has "bearing on profits, income, losses or assets". The relevant extract of the case (supra) is as under: "That is, in our considered view, purely fallacious logic. In our considered view, under Section 92B, corporate guarantees can be covered only under the residuary head i.e. "any other transaction having a bearing on the profits, income, losses or assets of such enterprise". It is for this reason that Section 92B, in a way, expands the scope of international transaction in the sense that even when guarantees are issued as a shareholder activity but costs are incurred for the same or, as a measure of abundant caution, recoveries are made for this non-chargeable activity, these guarantees will fall i....
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....included in the definition of 'international transactions'. The first two categories of transactions, which are stated to be included in the scope of expression 'international transactions' by virtue of clause (a) and (b) of Explanation to Section 92B, are transactions with regard to purchase, sale, transfer, lease or use of tangible and intangible properties. These transactions were anyway covered by transactions 'in the nature of purchase, sale or lease of tangible or intangible property'. The only additional expression in the clarification is 'use' as also illustrative and inclusive descriptions of tangible and intangible assets. Similarly, clause (d) deals with the " provision of services, including provision of market research, market development, marketing management, administration, technical service, repairs, design, consultation, agency, scientific research, legal or accounting service" which are anyway covered in "provision for services" and "mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection....
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....position that corporate guarantees issued by the assessee to the various banks and crystallization of liability under these guarantees, though a possibility, is not a certainty. In view of the discussions above, the scope of the capital financing transactions, as could be covered under Explanation to Section 92B read with Section 92B(1), is restricted to such capital financing transactions, including inter alia any guarantee, deferred payment or receivable or any other debt during the course of business, as will have "a bearing on the profits, income, losses or assets or such enterprise". This precondition about impact on profits, income, losses or assets of such enterprises is a precondition embedded in Section 92B(1) and the only relaxation from this condition precedent is set out in clause (e) of the Explanation which provides that the bearing on profits, income, losses or assets could be immediate or on a future date. These guarantees do not have any impact on income, profits, losses or assets of the assessee. There can be a hypothetical situation in which a guarantee default takes place and, therefore, the enterprise may have to pay the guarantee amounts but such a situation....
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....he assessee is allowed and the ground of appeal of the Revenue is dismissed. 106. The next issue raised by the assessee in ground No. 9 is that the learned CIT (A) erred in confirming the disallowance made by the AO for Rs. 31,00,093/- on account of professional fees. 107. The assessee to acquire a group of companies namely Dystar Group, based in Germany, established a subsidiary company namely Kiri Holding Pvt Ltd. in Singapore. For this purpose, the assessee was requiring the fund from the company namely well prospering Ltd. In this connection, the assessee engaged a company namely Wong Partnership LLp based in Singapore to draft various agreements and provide legal advice for arranging the funds through convertible bonds. Accordingly the assessee paid consulatncy and legal fee for Rs. 31,00,093/- to Wong Partnership LLP and claimed that such expenses are revenue in nature which are allowable as deduction under section 37 of the Act. 107.1 However the AO found that the assessee has incurred the expenses in connection with the share subscription, shareholders agreement and convertible bond subscription agreement. Accordingly the AO was of the view that such expenses were in the....
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....pital in nature. 112.1 Before we look into the fact whether the impugned consultancy expenses are in the nature of capital expenses, we note that admittedly the assessee to acquire the Dystar Group has established a company in Singapore. Now the Singapore company was requiring fund for the acquisition of Dystar Group. To arrange the fund for the Singapore company, a professional consulting from was engaged. Against the professional advices for arranging the fund for the Singapore company, a fee of Rs. 31,00,093/- was paid. First of all, the question arises whether such payment was made by the assessee wholly and exclusively for the purpose of its business. The answer stand in negative. It is because the funds were arranged for the Singapore company and not for the assessee. Singapore company is a separate and independent legal entity which is chargeable to tax in Singapore. Thus it seems to us that the assessee has not incurred such expenses wholly and exclusively for its business which is a prerequisite for claiming the deduction under section 37(1) of the Act. 112.2 Indeed, the AO has not touched upon the issue whether the impugned expenses were incurred wholly and exclusively....
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..... The Ld.CIT(A) has erred in law and on facts in holding that the assessee has not provided any loans but the guarantee which did not involve any expenditure on the part of the appellant nor any monetary benefits in the hands of the recipient AE. 7. On the facts and in the circumstances of the case, the Ld.CIT(A) ought to have upheld the order of the Assessing Officer. 8. It is, therefore, prayed that the order of the Ld.CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 9. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary. 116. The 1st issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition in part amounting to Rs. 1,91,56,166/- made by the AO under section 14A read with rule 8D of Income Tax Rule. 117. The issue raised by the Revenue has already been adjudicated by us along with the appeal of the assessee bearing No. 3491/AHD/2015 vide paragraph No. 94 of this order. The ground raised by the Revenue was dismissed by us. For the detailed discussion, please refer the relevant paragraph. Accordingly, the ground of appeal raised by the Revenue is dismis....
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....Accordingly the AO disallowed the sum of Rs. 19,00,721/- and added to the total income of the assessee. 120. Aggrieved assessee preferred an appeal to the learned CIT (A). The learned CIT (A) after considering the facts deleted the addtion made by the AO by observing as under: 4.10. Regarding the first issue it is noted from the evidences given by the appellant as well as noted by the AO in his order that the services have been rendered by the foreign agents outside India. The sales were booked by them in their country or for the country for which they have been appointed as commission agents. None of the activities soliciting the clients and procuring the orders has taken place in India. The goods were being delivered by the appellant company in the other country. The activities of procuring the payment on behalf of the appellant company were also done abroad. The AO was therefore, incorrect to hold that the source of income lies in India as the sales have been made from India. The provisions of Income Tax Act clearly provide that the tax would be deducted on. the income which is taxable in India. The activity of earning the income is not the sale but soliciting the sales by co....
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....(i) also cannot be applied. 4.13. Reliance is placed on the judgement of honourable Supreme Court in the case of GE India Technology Centre Private Limited 327 ITR 456 and the judgement of honourable ITAT Mumbai in the case of our Ardesi B Cursetjee & Sons Ltd. 115 TTJ 916. 4.14. Therefore, in view of the preceding discussion the AO was not justified to hold that the commission payable to the overseas agents was deemed to accrue or arise in India and is taxable under the Act in view of the specific provisions of sections 5 (2)[b) read with section 9 (l)(i) of Income Tax Act. 4.15. Regarding the issue of obtaining no deduction certificate under section 195 it is seen that for the applicability of the provisions of this section, the sum must be chargeable under the provisions of the Income Tax Act. Section 195 provides for deduction of tax by the person responsible for paying to a non-resident any interest or any other sum chargeable under the Provisions of the Act. It is clear that the payment was not the interest. It has to be seen whether the payment is covered under the term "any other sum chargeable under the provision of this Act". It' has been observed in the precedi....
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.... appeal of the assessee bearing No. 3491/AHD/2015 vide paragraph No. 105 of this order. The ground raised by the Revenue was dismissed by us. For the detailed discussion, please refer the relevant paragraph. Accordingly, the ground of appeal raised by the Revenue is dismissed. 126. The issues raised in ground nos. 8 and 9 by the Revenue in its appeal are general in nature. Hencce the same is dismissed being general in nature and infructuous. 127. In the result the appeal of the Reveune is dismissed. * Coming to ITA No. 1850/AHD/2016 for the assessment year 2012-13, an appeal by the assessee 128. The assessee has raised the following grounds of appeal: 1. The learned CIT(A) has erred both in law and on the facts of the case in confirming the disallowance u/s.14A r.w.r.8D to the extent of Rs. 20,000/-. 2. The learned CIT(A) has erred both in law and on the facts of the case in holding that disallowance of interest u/s.14A works out to Rs. 63,60,000/- and as regards administrative expenditure the same works out to Rs. 28,66,874/-. 3. The learned CIT(A) has erred both in law and on the facts of the case in holding that Corporate Guarantee given to associate enterprise is an ....
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....relevant paragrapgh No.56 of this order. Thus we hold that the principles laid down in above paragraph will mutas mutandis apply herein also. In the result ground of appeal raised by the assessee is partly allowed whereas ground of appeal raised by the Revenue is dismissed. 132. The next issue raised by the assessee vide ground no. 3, 4, and 5 of its appeal is that erred in confirming the part addition on account of corportae guarantee extended to AE. 133. We note that the Revenue is also in appeal vide gorund no. 3, 4, and 5 of its appeal in ITA No. 2696/Ahd/2016 against the part relief provided by the learned CIT (A) to the assessee. The relevant ground of appeal of the Revenue reads as under: 1. The Ld.CIT(A) has erred in law and on facts in rejecting the arm's length guarantee fee of 2.16% arrived at by the TPO in respect of guarantee given by the assessee reducing upward adjustment of Rs. 1,91,48,980/- to Rs. 44,32,634/- without properly appreciating the facts of the case and the material brought on record. 2. The Ld.CIT(A) has erred in law and on facts in holding adhoc guarantee fee of 0.50% in respect of guarantee given without appreciating the fact that the above rate....
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....in law and on facts in rejecting the arm's length price of Rs. 1,91,48,980/- determined by TPO/Assessing Officer in respect of guarantee given by the assessee company in respect of loans taken by the group company. 6. he Ld.CIT(A) has erred in law and on facts in holding that assessee has not provided any loans but the guarantee which did not involve any expenditure on the part of the appellant nor any monetary benefits in the hand of the recipient AE. 7. On the facts and in the circumstances of the case, the Ld.CIT(A) sought to have upheld the order of the Assessing Officer. 8. It is therefore, prayed that the order of the Ld.CIT9A) may be set aside and that of the Assessing Officer may be restored to the above extent. 138. The 1st issue raised by the Revenue is that the learned CIT (A) erred in restricting the addition made under section 14A upto 20,000/- out of total addition of Rs. 2,47,78,596/- only. 139. The issue raised by the Revenue has already been adjudicated by us along with the appeal of the assessee bearing No. 1850/AHD/2016 for A.Y. 2012-13 vide paragraph No. 131 of this order. The ground raised by the Revenue was dismissed by us. For the detailed discussion,....
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....on't fall under the catogory of extension of existing project/ business as provided under the provision of section 36(1) of the Act. Indeed the same is expansion of project which is different from extension of project/business. The assessee alternatively calimed that it has interest free fund which exceeds by 9.11 time than the amount of investment in CWIP and capital goods. Thus the capitalisation of interest is not required. The assessee in its support placed reliance on various judgment of Hon'ble Gujarat High Court including CIT vs. Torrent Power Ltd. reported in 363 ITR 474. 144. The learned CIT(A) allowed the appeal of the assessee in accordance with the alternate claim made by the assesse by observing as under: It is apparent that the appellant had made the investment in CWIP at Rs. 4160 lacs, while it had the interest freee own fund of Rs. 37902 lacs as on 31/03/2012. Thus, the intereest free funds owned by the appellant were much more than the interest free advanced granted to the aforesaid three parties. Thus, no interest bearing funds have been utilised for the purpose of advances to the aforesaid three parties. Even otherwise also the advances and CWIP given to the a....
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....he assessee was having share holding funds to the extent of 2607.18 crores and the investment made by it was to the extent of`Rs. 195.10 crores. In other words, the assessee had sufficient funds for making the investments and it had not used the borrowed funds for such purpose. This aspect of huge surplus funds is not disputed by the revenue which earned it the interest on bonds and dividend income. [Para 7] 148.1 In view of the above we hold that there cannot be any disallowance of interest expenses. Accordingly the grounds of appeal raised by the Revenue is dismissed. 149. The next issue raised by the Revenue vide ground no. 3 to 6 is that the learned CIT (A) erred in allowing the part relief to assessee out of addition made by the AO/TPO on account of corportae guarantee extended to AE. 150. The issue raised by the Revenue has already been adjudicated by us along with the appeal of the assessee bearing No. 1850/AHD/2016 vide paragraph No. 134 of this order. The ground raised by the Revenue was dismissed by us. For the detailed discussion, please refer the relevant paragraph. Accordingly, the ground of appeal raised by the Revenue is dismissed. 151. The next issuue raised by ....
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..../B/C of the Act. 8. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld.AO in initiating penalty u/s.271(1)(c) of the Act. 154. The first issue raised by the assessee in ground no. 1 is that the learned CIT (A) erred in confirming the disallowances of Rs. 13,20,404/- on account of late payment of employee's contribution towards EPF and ESI. 155. At the outset we note the leanred AR for the assessee conceded before us that the issue has been covered against the assessee by the order of Hon'ble Jurisdictional High Court in case of CIT vs. Gujarat State Road Transport Corporation reported in 366 ITR 170. Hence, respectfully following the order of Hon'ble High Court, we dismiss the ground of appeal of the assessee. 156. The next issue raised by the assessee vide ground no. 2 to 4 is that the learned CIT(A) erred in confirming the part addition on account of corportae guarantee extended to AE. 157. We note that the Revenue is also in appeal vide gorund no. 6 to 9 of its appeal in ITA No- 1814/Ahd/2017 against the part relief provided by the learned CIT (A) to the assessee. The relevant ground of appeal of the Revenue reads as under: 1. The....
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....as failed to appreciate that the assessee had invested more than Rs. 100 Crore in new capital assets which was extension of existing business and therefore the provisions of Section 36(1)(iii) was squarely applicable. 1.2. That the Ld.CIT(A) has failed to appreciate that the assessee had paid considerable amount of interest on borrowings made and it had no such interest free cash flow available to investment in acquisition of such capital asset (CWIP). 1.3. That the Ld.CIT(A) has failed to appreciate that the onus was on the assessee to demonstrate that the assessee had such interest free cash flow to invest in such new assets (CWIP). 2. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance u/s.36(1)(iii) of the IT Act amounting to Rs. 13402729/- made on account of Capital Advances. 3. The Ld.CIT(A) has erred in law and on facts in deleting the disallowance u/s.14A amounting to Rs. 7,88,66,656/-. 4. The Ld.CIT(A) has erred in deleting the addition of disallowance u/s.14A to the Book Profit u/s.115JB of the Act. 5. The Ld.CIT(A) has erred in deleting the addition of disallowance of foreign Commission expense of Rs. 619209/- even when the assessee faile....
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....56/- only. 167. At the outset, we note that the similar issue has been raised by the assessee in ITA No. 2524/Ahd/2015 in ground no. 1 & 2 which has been partly allowed in favor of the assessee. For the detailed discussion please refer the relevant paragrapgh No. 56 of this order. Thus we hold that the principles laid down in above paragraph will mutas mutandis apply herein also. In the result, the ground of appeal raised by the Revenue is dismissed. 168. The next issue raised by the Revenue vide ground 4 is that the learned CIT (A) erred in deleting the addition made in book profit computed under section 115JB of the Act for Rs. 7,88,66,656/- only. 169. At the outset we note that the similar issue has been raised by the assessee in ITA No. 2524/Ahd/2015 in ground no. 4 which has been partly allowed in favor of the assessee. For the detailed discussion, please refer the relevant paragrapgh No. 71 of this order. Thus we hold that the principles laid down in above paragraph will mutas mutandis apply herein also. In the result ground of appeal raised by the Revenue is partly allowed. 170. The next issue raised by the Revenue vide ground 5 is that the learned CIT (A) erred in delet....
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....ransactions. Accordingly the learned AR requested to delete the addition made by the authorities below. 179. We have heard the rival submissions and also perused the relevant finding given in the impugned orders of the lower authorities. It is sine qua non for invoking the provisions of chapter X of the Act that the transaction for the subscription of shares falls within the purview of income arising from international transaction. The transaction of subscribing of shares of a company is always on capital account. The AO has re-characterized the share application money as a loan simply because there was the time gap between the dates when the share application amount was paid and the shares were allotted. Admittedly the shares were allotted to the assessee. This fact of the allotment of shares can be found out from the observation of the AO/TPO on page 51 of the order which reads as under: "It is pertinent to note that in all the cases loans/share application given have been converted into equity investment in same financial year 2012-13 after enough time given to the AE's use interest free funds." 179.1 If the parties have agreed to treat the advance/share application money f....
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....lowed by the Assessing Officer u/s.194C r.w.s. 40(a)(ia) of the Act. However, ld.CIT(A) has confirmed the said disallowance by invoking the provisions of S.195 that too without issuing any notice to that effect. This action of ld.CIT(A) is patently illegal and without jurisdiction. 3. The ld.CIT(A) has erred in law and on facts of the case in confirming the action of the ld.AO of disallowing advertisement expense of Rs. 2,14,130/- u/s.40(a)(ia) r.w.s.195 of the Act. 4. The ld.CIT(A) has erred in law and on facts of the case in confirming the action of the ld.AO of applying s.194C of the Act which is not at all applicable to advertisement expenses. 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld.AO i....
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....ame as business income. Hence the assessee is not required to deduct the tax under section 195 of the Act for the reason that income is not chargeable to tax in Inida. 188. However the learned CIT (A) confirmed the action of the AO by observing as under: 7.3. I have carefully considered the facts of the case, assessment, order and submission of the appellant. The AO has made the disallowance of advertisement expenses of Rs. 2,14,130/- invoking the provisions of Section 40(a) (ia) of the Act due to non-deduction of the TDS u/s. 195 of the Act. it has been noticed that the appellant has credited the aforesaid amount in the ledger account of M/s. Market Bulletin as payment for advertisement. Since the appellant has not made any TDS nor it has submitted any details and evidences to show that the same have been offered for taxation by the recipient party in its books of account/return of income. The appellant has pleaded that the principle of natural justice has not been followed by the AO in the assessment proceedings by granting the opportunity to explain its contention. However, it has been seen that the appellant has not even furnished any details and evidences in support of its ....
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....yee is having any permanent establishment in India or services were provided within India. In absence of such finding it is held that the income earned by the non-resident payee cannot be deemed to be accrue or arise in India. Regarding applicability of section 195 of the Act, we observe that once the income is not taxable in India, there is no liability of deduction of tax. Therefore, it was not applicable for the assessee to deduct tax, therefore, there was no violation of provisions of section 195 of the Act. 191.2 Before parting it is pertinent to note that the assessee has challenged the addition on legal grounds also. However, we have allowed the appeal of the assessee on merits. Hence we don't find any reason to adjudicate the issue raised on legal ground. Accordingly, we direct to the AO to delete the addition by him. Hence, the ground of appeal of the assessee is allowed. 192. The issue raised by the assessee in ground no. 6 & 7 in its appeal are consequential and premature to decide. Hence the same are dismissed being infructuous. 192.1 In the result the appeal of the assessee is partly allowed. * Coming to ITA No. 1815/AHD/2017 for the assessment year 2014-15, an app....
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....allowed in favor of the assessee. For detailed discussion please refer the relevant paragrapgh No. 56 of this order. Thus we hold that the principles laid down in above paragraph will mutas mutandis apply herein also. In the result, the ground of appeal raised by the Revenue is dismissed. 198. The next issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition made by the AO in book profit computed under section 115JB of the Act for Rs. 3,91,90,512/. 199. At the outset we note that the similar issue has been raised by the assessee in ITA No. 2524/Ahd/2015 in ground no. 4 which has been partly allowed in favor of the assessee. For detailed discussion, please refer the relevant paragraph No.71 of this order. Thus we hold that the principles laid down in above paragraph will mutas mutandis apply herein also. In the result ground of appeal raised by the Revenue is partly allowed. 200. The next issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition made by the AO for Rs. 34,96,732/- on account foreign commission under section 40(a)(ia) of the Act. 201. At the outset we note that the similar issue has been raised by the Reve....