Payment Made Overseas For Providing Information On Tariff Change Is Not 'FTS' And Hence Does Not Warrant TDS Deduction U/s 195: Delhi ITAT

The New Delhi ITAT held that no tax is deductible at source u/s 195 on payments made to overseas logistics company for rendition of logistics services, as such services cannot be treated as fees for technical services (FTS) as defined in Explanation 2 to Section 9(1)(vii). Finding that the sole basis of the Revenue for holding that the payment made to overseas logistics company is towards consultancy services is that as per one of the terms of contract executed between Assessee and the...

Impact Of Working Capital Adjustment On Outstanding Trade Receivable Must Be Verified Before Making ALP Adjustment Qua Notional Interest: Ahmedabad ITAT

The Ahmedabad ITAT remitted the issue of transfer pricing adjustment regarding interest on overdue trade receivables in case of entity engaged in manufacturing of pharmaceutical products, while emphasizing that no further adjustment is warranted on outstanding receivables from AEs once working capital adjustment is already factored in. The credit period means the time period provided to the AEs/Non-AEs to clear their outstanding dues towards the export proceeds. The dispute over trade...

Rectification Order Passed In Name Of Non-Existent Entity Despite Having Knowledge Of Its Merger, Is Invalid: Mumbai ITAT

The Mumbai ITAT held that rectification order passed in the name of a non-existent entity, despite informing Revenue regarding its merger, is non-est in the eyes of law. The Division Bench comprising Prashant Maharishi (Accountant Member) and Raj Kumar Chauhan (Judicial Member) observed that “the internal correspondence of the Revenue also shows that the Assessing Officer was aware about the merger. Still the Assessing Officer chooses to pass the rectification order in the name of a...

Interest Received By Overseas Head Office From Its Indian Permanent Establishment Is Not Taxable In View Of Treaty Benefits: Mumbai ITAT

Referring to the provision of Article 12 and 7 of the India-France DTAA which demonstrate that interest payment made by the permanent establishment to the head office are not taxable in the hands of the head office, the Mumbai ITAT held that interest received by the overseas head office (HO) from its Permanent Establishment (PE) is not taxable under beneficial provision of DTAA. The permanent establishment concept creates a minimum threshold of business presence below which the source ...

CSR Expenditure Is Mandatory, Does Not Justify Disallowance Of Section 80G Deduction: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that expenditures under corporate social responsibility (CSR) are mandatory and does not justify disallowance of these expenditures under Section 80G of the Income Tax Act if other conditions of Section 80G are fulfilled. The bench of Anubhav Sharma (Judicial Member) and M. Balaganesh (Accountant Member) has observed that the voluntary nature of donation is by nature the fact that it is not on the basis of any reciprocal promise of...

Receipts From CRM Services Not Taxable In India As Royalty Or FTS: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that receipts from Customer Relationship Management (CRM) services are not taxable in India as royalty or Fee for Technical Services (FTS).The bench of Saktijit Dey (Vice President) and Brajesh Kumar Singh (Accountant Member) has observed that on November 26, 2019, the assessee filed a revised return of income, declaring income of Rs. 2,94,91,40,080 towards the subscription fee from CRM services and Rs. 2,69,11,689 towards interest...

Date Of Possession Of New Property To Be Considered As Date Of Acquisition; ITAT Allows Deduction

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the date of possession of new property to be considered as date of acquisition and the assessee is entitled to deduction under Section 54 of the Income Tax Act on the purchase of new property.The bench of Raj Kumar Chauhan (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that the date of possession of new property should be considered as the date of acquisition of the property. By entering into an...

Final Assessment Made By AO After Expiry Of One Month Of Receiving Directions From Dispute Resolution Panel, Is Time Barred: Chennai ITAT

The Chennai ITAT recently held that the final assessment order dated Nov 21, 2017 passed after expiry of one month from the end of the month in which the DRP directions were received by the Revenue is barred by limitation and hence, “passed wholly without jurisdiction and therefore, null in the eyes of law”. Section 144C(13) of Income tax Act mandates the completion of the assessment within one month from the end of the month in which DRP directions are received. Rule 11 of the Dispute ...

Once Cash Deposits In Bank A/C Of Lender Firm Is Accepted As Coming From Explained Sources, No addition Is Permitted U/s 68 As Unsecured Loan: Delhi ITAT

The Delhi ITAT deleted the addition made u/s 68 being unsecured loan obtained from a firm by the Assessee for further investment in a company on the ground that the identity, creditworthiness, and genuineness of the transaction stands proved. Section 68 of Income tax Act aims to ensure individuals and corporations transparently disclose their income by addressing unexplained cash credits in their books of accounts, placing the responsibility on the taxpayer to prove the legitimacy of...

Receipts By Foreign Entity From Provision Of Software Services In India Are Not Taxable U/s 44BB In Absence Of Its PE In India: Delhi ITAT

The Delhi ITAT held that receipts by a foreign entity from provision of software services to oil companies in India being in the nature of business profits are not taxable in India in the absence of its Permanent Establishment (PE) during the relevant AYs. Section 44BB of Income tax Act contains special provisions for computation of taxable income of a non-resident assessee engaged in the business of providing services or facilities in connection with, or supplying plant and machinery...

Mark-To-Market Loss, Loss On Forward Contracts, Loss On Forward Premium Account Not Speculative In Nature, ITAT Deletes Addition

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the income tax addition and held that mark-to-market losses, losses on forward contracts, and losses on forward premium accounts are not speculative in nature.The bench of Yogesh Kumar U.S. (Judicial Member) and Pradip Kumar Kedia (Accountant Member) has observed that CIT(A) has committed no error in deleting the addition, observing that the forward mark contracts on foreign currency are incurred during the normal course of...

SBI Not Liable To Deduct TDS On Transactions Related To Assignment Of Loans By NBFC: ITAT

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the State Bank of India (SBI) is not liable to deduct tax at source (TDS) on transactions related to the assignment of loans by non-banking financial companies (NBFC).The bench of Om Prakash Kant (Accountant Member) and Sandeep Singh Karhail (Judicial Member) has observed that since the NBFC is not acting as an agent of the assessee in respect of the loans advanced to the borrowers, therefore, we are of the considered view...