INCOME TAX
Database Capturing Market Volatility Shall Be Considered For Making ALP Adjustment Qua Bullion Purchase: Mumbai ITAT
The Mumbai ITAT rules on TP-adjustments w.r.t administrative support services in relation to interbank indemnities, provision of IT-enabled services, and purchase of precious metals in case of company carrying out banking activities. With respect to purchase of precious metals like gold & silver imported from London branch, the Bench comprising Vikas Awasthy (Judicial Member) and Amarjit Singh (Accountant Member) found that even though assessee justified transaction price by making...
Notional Interest Income Credited To P/L A/C As Per Accounting Standard Requirement Is Not Liable For Tax Under Real Income Principle: Mumbai ITAT
While referring to the decision of Chennai Bench of Tribunal in the case of M/s. Shriram Properties Limited (ITA No. 431/Chny/2022), the Mumbai ITAT held that the notional interest income credited by the assessee to the profit and loss account as per the requirement of Indian Accounting Standard has not actually accrued to the assessee and hence the same is not liable for taxation under Real Income principle. The Bench of B.R. Baskaran (Accountant Member) and Sandeep Singh Karhail...
No ALP Adjustment Is Permitted On Notional Amount Of Royalty Paid By Overseas Subsidiary, Reiterates Mumbai ITAT
The Mumbai ITAT confirmed the CIT(A)'s action in deleting the addition made on account of waiver of royalty received from two subsidiaries. The Bench comprising Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) observed that considering the financial position of subsidiaries located in Bangladesh and Sri Lanka, the assessee agreed to waive part of the royalty and thereby credited 1% of the royalty amount to the P&L account instead of 3% as per the...
ITAT Cases Monthly Round Up: April 2024
Jaipur ITAT Directs Dept. To Allow Taxpayer To File Revised Appeal Memo In Form No. 35 For Removal Of Deficiency Case Title: Zila Parisad verses Addl. CIT, TDS While relegating the taxpayer to file a revised appeal memo in Form No. 35 either on the e-filing portal of the department or physical form, the Jaipur ITAT restored the matter back to the file of the CIT(A) to adjudicate the matter of rectification application for removal of deficiency, afresh, as per law. Incorrect...
Issuance Of Letters Of Comfort/Support Will Construe As International Transaction U/s 92B: Mumbai ITAT
The Mumbai ITAT recently ruled on selection of comparable and transfer pricing adjustment on account of non-recovery of charges for providing letter of comfort/support and royalty in case of company engaged in manufacturing paints and enamels. Under the assessee's support services and intragroup services segment, the Bench excluded two companies, namely, Axis Integrated Systems Ltd, and Inmacs Management Services Ltd citing functional dissimilarity and unavailability of complete data...
Assessee Is Eligible For Credit Of TCS Paid U/S 194Q If There Is No Shortfall In Payment Of TDS: Vishakhapatnam ITAT
On finding that there is no short fall of TDS and the assessee is eligible to get credit of the entire amount, the Visakhapatnam ITAT directed the AO to grant credit of the entire amount deducted as tax at source u/s. 194Q of the Income Tax Act. The Bench of Duvvuru Rl Reddy (Judicial Member) observed while referring the CBDT Circular No. 452 that “kaccha arahtias are concerned, the turnover does not include the sales effected on behalf of the principals and only the gross commission...
No Addition Permitted U/s 69A Once Taxpayer Properly Explains Source Of Cash Deposit: Vishakhapatnam ITAT
Finding that the assessee has properly explained the source of cash deposit, the Visakhapatnam ITAT directed the AO to delete the addition made u/s 69A of the Income Tax Act. The Bench of Duvvuru Rl Reddy (Judicial Member) observed that “the assessee has mentioned about the receipts of sale consideration as per the sale of agreement in his books of accounts. As per the agreement of sale, the purchaser has paid the sale consideration of Rs. 30 lakhs to the assessee. But...
Correction In Form 35A Is No Basis To Treat Such Form As Filed Beyond Time Limit: Mumbai ITAT Allows Expenses Incurred In Earning Capital Gain
Since the AO did not consider that assessee has incurred expenses as per the terms & conditions of the agreement, the Mumbai ITAT directed the AO to allow the claim of the assessee to treat Form No. 35A as filed after verification of the copy of agreement and copy of bank statement filed by the assessee. The Bench of Amit Shukla (Judicial Member) and Amarjit Singh (Accountant Member) observed that “it is evident that assessee has made correction in the form 35A which cannot be...
Time Barred Notice Issued U/s 153C And Consequent Assessment Order Passed U/s 143(3) R/w/s 153C Is Void Ab Initio: Chennai ITAT
The Chennai ITAT held that since the notice issued by AO for subject assessment year falls beyond the stipulated six assessment years and four relevant assessment years, considering the satisfaction note, the notice issued by AO u/s 153C of Income tax Act for initiation of proceeding against assessee and consequent assessment order passed u/s.143(3) r/w/s 153C is barred by limitation, void ab initio and liable to be quashed. The Bench of Manjunatha. G (Accountant Member) and Manomohan...
Assessment Made Purely Based On Assumption & Unverified Statement Of Third Party, Is Bad In Law: Mumbai ITAT
Finding that the AO has completely relied on the statement of third party without giving opportunity to the assessee to prove its point of view, which is against natural justice, the Mumbai ITAT held that such assessment order to be bad in law which was made purely on the basis of assumption and unverified statement of the third party. The ITAT also held that the addition cannot be made without bringing proper material on record or bringing on record the proper joint statement from the...
ITO Can Presume That Books Of A/C Found During Search U/s 132/ Survey U/s 133A Belongs To Person Upon Whom Said Action Is Initiated: Delhi ITAT
While rejecting the appeal challenging the validity of notice issued u/s 153A, the New Delhi ITAT held that section 292CC of the Income Tax Act empowers an officer to presume that the books of account or other document found during search u/s 132 or survey u/s 133A belongs to a person upon whom search or survey has been done. The Bench of M. Balaganesh (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) reiterated while referring the decision of Orrisa High Court in the case of...
AO Can't Reopen Assessment Beyond Period Of Four Years When There Was Full Disclosure By Assessee: Mumbai ITAT
On finding that the reopening of the assessment is beyond the time limit provided under the proviso to Section 147 of the Income Tax Act, the Mumbai ITAT quashed the order of disallowance passed by the AO for disallowing the interest paid for acquisition of the property from computation of short-term capital gain. The Bench of Amit Shukla (Judicial Member) and S Rifaur Rahman (Accountant Member) observed that “The permissible condition for reopening the assessment beyond the period of...