TaxTMI 
TaxTMI 
2026 (1) TMI 1408
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....r which is resolved under the mutual agreement procedure and therefore the Assessee has wrote a letter dated 07.02.2025 that the transfer pricing adjustments have been resolved under the mutual agreement procedure and therefore all the grounds relied there to are not to be decided as withdrawn. 3. Therefore, the only issue was with respect to the balance ground of appeal relating to corporate tax additions which are ground no. 17, 18 and 19 of the appeal. Thus, these are the only issues pending in this appeal. 4. The brief fact of the case shows that, that Assessee filed its return of income on 30.11.2017 at a total loss of Rs. 306,57,86,824/- wherein after the direction of the Ld. Dispute Resolution Panel, the Ld. Assessing Officer retained three disallowance/additions as under:- a. Depreciation claim of Rs. 2,14,45,821/- pertaining to the new assets purchased on which depreciation is disallowed by the Assessing Officer as Assessee has not explained the source of purchase of fixed assets. b. The claim of the provision of warranty of Rs. 4,51,07,257/- added by the Ld. Assessing Officer holding that it is contingent in nature. c. Rental income of Rs.....
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....ntions and perused the orders of the Ld. lower authorities. The facts clearly shows that, that Assessee is engaged in the business of dealing heavy duty trucks, buses, coaches and other vehicles. The Assessee has generated net revenue during the year of Rs. 673 crores and has also received share application money of Rs. 600 crores from its holding company. Further, the amount of investment in the fixed assets is recorded in the books of accounts. The purchases of the fixed assets are made through banking channels, recorded in the books of accounts which are audited under the Companies Act as well as under the Income Tax Act. It is not the case of the Ld. Assessing Officer that purchase of assets are bogus because of the reason that the original addition made u/s. 68 of the Act was deleted and depreciation was disallowed. The depreciation disallowance was not on account of user of the assets but only for the reason that Assessee did not explain to the satisfaction of the Ld. Assessing Officer the sources of fund for purchase of assets of Rs. 17.80 crores. As there is no doubt about the actual cost of the assets, user of the assets and ownership of the assets, we do not find any reas....
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....ecomes opening balance of the warranty provision for assessment year 2017-18. During the assessment year 2017-18, Assessee made a further contribution of Rs. 26,53,18,804/-. Out of the above provisions and provision available at the beginning of the year, Assessee utilized the provision of Rs. 22,49,68,382/- leaving the closing balance of Rs. 8,54,57,679/-. Thus, according to us for assessment year 2016-17, the Assessee must be allowed the deduction of Rs. 9,18,70,138/- and for the assessment year 2017-18, a deduction of Rs. 26,53,18,804/- should be allowed to the Assessee. According to us, this is the correct amount of deduction the Assessee should have been allowed for respective assessment years. Thus, the addition of Rs. 4,51,07,257/- made by the Ld. Assessing Officer is not correct. It is not the claim of the Assessee that this is the expenditure incurred by the Assessee during that year. In view of this, we restore the whole ground back to the file of the Ld. Assessing Officer to give the correct treatment of the warranty provisions and compute the allowances. We have also perused the computation of total income where the Assessee has increased the losses by claiming the prov....
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.... 14. The Assessee is in appeal before us. 15. The Assessee submits that such income is not from the property but income from profits and gains of business. It is submitted that merely because the TDS deduction u/s. 194I which is rental income from renting of trailers, which is business of the Assessee, it cannot be taxed as income from house property. Therefore, it was stated that such income cannot be taxed as income from house property. It was further stated that, that income of Rs. 15,00,000/- is from subletting of exhibition space to the finance company which is also not pertaining to Assessment Year 2017-18, but for Assessment Year 2016-17. The above income is offered for taxation by the Assessee in Assessment Year 2016-17. The Assessee also referred to the fact that such income is indeed against the sales promotion expense. 16. The Ld. Departmental Representative submitted that the Assessee failed to furnish the requisite details and therefore the income is chargeable to tax under the head income from house property. The Assessee did not submit any information about the renting of the trailers. Therefore, there is no infirmity in the orders of the Ld. lower authorities....
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.... Ld. Assessing Officer on 30.07.2021 by way of draft Assessment Order and subsequently by final Assessment Order dated 08.07.2022 wherein the returned losses of the Assessee of Rs. 1,74,51,63,826/- is assessed at Rs. 4,39,97,09,221/-. The transfer pricing adjustments were already resolved through MAP proceedings and the Assessee has withdrawn the grounds of appeal related to the transfer pricing by filing the revised grounds of appeal which are only with respect to the corporate tax matters. Therefore, now this appeal is alternate to corporate tax matters. 21. The Ground no. 1 is general in nature and therefore same is dismissed. 22. The Ground no. 2 is with respect of the disallowance of 30% of Rs. 2,52,40,990/- and Rs. 7,53,61,452/- for non-deduction and short deduction of tax u/s. 194C and 194J of the Act. 23. The briefly stated facts of the case shows that, that the Ld. Assessing Officer examined the tax audit report and found that there is a short deduction of tax of Rs. 2,52,42,990/- u/s. 194C and of Rs. 7,53,61,452/- u/s. 194J of the Act. The Assessing Officer found that this is the short deduction of tax and therefore for the total sum of Rs. 10,06,04,442/-, he dis....
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.... application before the Ld. Dispute Resolution Panel vide page no. 504 of the paper book. That this miscellaneous application is with relation to the other addition. Further, while reading the direction of the Ld. DRP, we do not find that any such additional evidence were admitted or not admitted by the Dispute Resolution Panel. Therefore, we find that, that the claim of the Assessee that there is not short deduction of tax at source has not at all been considered by the Ld. lower authorities. On verification of the details furnished before us, it is evident that, that Assessee has produced the evidence to that fact that Assessee has deducted tax properly. But, as these details were not verified by the Ld. Authorities, we restore this ground of appeal to the file of the Ld. Assessing Officer with a direction to verify the detail and if found in order to delete the disallowance. In the result, ground no. 2 of the Appeal is allowed. 28. Ground no. 3 of the Appeal is with respect to an addition of Rs. 198 crores under the provisions of section 56(2)(viib) of the Act for the reason for consideration received for issue of shares exceeding the fair market value of such shares. During ....
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....and held that, that the provisions of section 56(2)(viib) does not apply on shares of the non-resident. Accordingly, we allow ground no. 3 and direct the Ld. Assessing Officer to delete the addition u/s. 56(2)(viib) of the Act of Rs. 198 crores. 30. Ground no. 4 is the adhoc disallowance made by the Ld. Assessing Officer on cost of vehicles, repairs expenditure and residual value obligation settlement expenses. We find that the Ld. Assessing Officer has noted that, that Assessee has claimed various expenditure amounting to Rs. 27,86,84,867/- being sum of Rs. 16,80,10,793/- on cost of vehicles on settlement, sum of Rs. 3,84,60,840/- being technical goodwill on repairs and further a sum of Rs. 7,22,13,234/- on residual value obligation settlement expenses. The Assessing Officer questioned the Assessee. But he found that Assessee has furnished neither statements nor documentary evidence and therefore he disallowed 10% of such expenses amounting to Rs. 27,86,84,867/- in the draft Assessment Order. The Assessee challenged the same as per ground no. 8 before the Ld. DRP wherein in Paragraph no. 8, the Ld. DRP has categorically held that, that Assessee has not utilized the opportunity ....
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....ove expenditure should not have been disallowed at rate of 10%. 34. The Ld. Departmental Representative supported the orders of the Ld. lower authorities. 35. We have carefully considered the rival contentions and perused the details of cost of vehicles on settlement, residual value obligation and technical goodwill on repairs. We find that as the technical goodwill on repairs of Rs. 3,84,60,840/- is questioned by the Ld. Assessing Officer in the subsequent years and after obtaining the explanation of the Assessee the disallowance was not made. We also find that this is the expenditure on general repairs of the vehicles sold by the Assessee for the reason that these are part of the free services or minor repair works just to save the brand value and goodwill of the company as well as the relationship with the customers. In view of this, the disallowance made by the Ld. Assessing Officer being 10% of that expenditure deserves to be deleted and hence deleted. 36. With respect to the cost of vehicles on settlement, the facts are very clear that Assessee has recognized the value of Rs. 17,88,75,992/- and also claimed the expenditure of Rs. 16,80,10,793/-. Therefore, Assessee h....
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....ed any evidence in the genuineness of the claim and therefore the disallowance was made. The fact of the case shows that, that Assessee supplied green bus service in the city of Nagpur as per the directions of the Nagpur Municipal Corporation (NMC) where the Assessee was awarded the contract for operation and maintenance of Ethanol Green buses service as per resolution dated 20.10.2016. According to that, Assessee floated a Special Purpose Vehicle by incorporating M/s. SST Sustainable Transport Solutions Private Limited as its wholly owned subsidiary. That Company started operation on 18.08.2017. The Assessee supplied 58 Ethanol buses under operating lease to SST. The Assessee charged lease rent from the subsidiary company. This lease rent was in consideration for leasing of these 58 buses to the subsidiary company. As these buses were rented out, the Assessee claimed depreciation on the same. The Assessing Officer disallowed the same holding that it is not a genuine transaction because the Assessee has purchased the vehicles on the last day and put to use on the same day. 38. It is the submission of the Assessee that these buses were manufactured by the Assessee and given on op....