Sales Commission Paid To Overseas Subsidiary For Non-Technical Services Is Not 'FTS', Does Not Attract TDS Liability U/S 195: Bangalore ITAT

The Bangalore ITAT deleted the disallowance made by the AO u/s 40(a)(ia) on ground of non-deduction of tax at source on sales commission paid by the assessee company/ respondent to its US based subsidiary as well as other AE on account of selling & marketing services. The Division Bench comprising George George K (Vice-President) and Padmavathy S (Accountant Member) observed that the sales and marketing services rendered to assessee by its US based subsidiary does not fall within...

Delay In Allotting Shares No Basis To Treat Share Application Money In Hands Of Overseas AE As 'Loan': Mumbai ITAT Deletes Notional Interest

The Mumbai ITAT held that when no income had accrued from the transaction of remittance of share application money by assessee to its overseas AE, then such transaction cannot be subjected to the transfer pricing provisions The ITAT deleted a transfer pricing addition made by the TPO on account of notional interest on share application money paid by assessee to its AEs. Transaction between assessee/ Appellant and its AE was in the nature of remittance towards share application...

Employee Working Beyond Banking Hours May Be Classified As Violation Of Banking Rules, But No Basis To Assume Additional Income: Delhi ITAT

The Delhi ITAT deleted the addition made by AO in the absence of any supporting evidence, which was merely based on assumption and not on any material recovered during search and seizure. The ITAT further clarified that assessee/ employee doing overtime beyond working hours may be classified as violation of banking rules, but could not form basis for addition, assuming that assessee has received commission from his manager for same. The Bench of S. Rifaur Rahman (Accountant ...

Current Transactions Pertaining To Conveyance Expenses Incurred By Holding Company On Behalf Of Subsidiary Is Not Deemed Dividend: Delhi ITAT

The Delhi ITAT held that transaction between assessee and its subsidiary cannot be treated as deemed loan u/s 2(22)(e), as they are current transactions that pertain to travelling & other expenses incurred by assessee on behalf of its subsidiary. Any loan/ advance given by a closely held company to a shareholder holding 10% or more voting power is considered a dividend under Section 2(22)(e) of Income tax Act. Such income is taxable in the hands of the recipient shareholder as...

Ahmedabad ITAT Deletes Addition Of Decentralized Govt Grants Merely Routed Through Assessee, Directly Utilized By Other Govt Agencies

Finding that assessee had followed a consistent and reasonable policy in recognizing income, and the amount in question was rightfully excluded from taxable income, the Ahmedabad ITAT deleted the addition made by AO on account of understatement of income. The ITAT held so after emphasizing that said income was never accrued to assessee nor did it represent real income as the funds were never utilized by the assessee but were simply transferred to other government agencies as per State ...

Interest On Delayed Customs Duty Is Compensatory In Nature And Hence Allowable Expenditure U/S 37(1): Bangalore ITAT

Finding that the interest payment is incurred wholly & exclusively for business purposes, and is neither personal nor capital in nature, the Bangalore ITAT held that interest on delayed customs duty cannot be treated at par with penalty.The ITAT therefore clarified that such interest payment is an accretion to the main payment and not penalty, and hence, allowable as revenue expenditure u/s 37. The Division Bench comprising Laxmi Prasad Sahu (Accountant Member) and Keshav Dubey (Judicial...

Taxpayer Can't Make Fresh Claim Of Deduction U/S 80IA In Response To Notice U/S 153A After Search In Unabated Assessment: Hyderabad ITAT

The Hyderabad ITAT ruled that the assessee cannot make a fresh claim of deduction under Chapter VI-A of the Income Tax Act, for the first time, in the return of income filed in response to notice issued u/s 153A, pursuant to search conducted u/s 132 of the Act, in unabated/completed assessment as on the date of search. However, in case of abated assessments, like the AO who can make an assessment based on incriminating materials and any other information made available to him, ...

Revenue Shared With Franchise Doesn't Attract TDS Liability U/S 194-I If No Actual Services Were Rendered: Delhi ITAT

The Delhi ITAT ruled that TDS u/s 194-I has no application on the franchise fee, if the franchisee/collaborator does not render any service, and claim of expenditure is nothing but sharing of revenue in accordance to the agreement undertaken by the parties. Section 194I of Income tax Act imposes an obligation for TDS deduction on persons (other than individual/HUF who are not subject to audit) making rental payments to resident Indians above a specified limit i.e., 2.40 lacs in a year. ...

Allotment Letter By Developer Shall Be Treated As 'Construction' For Benefit Of Set-Off Of Capital Gains U/S 54: Kolkata ITAT

Referring to the CBDT Circular No. 872 dated Dec 16, 1993, the Kolkata ITAT clarified that allotment of flats/houses by Cooperative Societies and other Institutions whose scheme of allotment and construction are similar to Delhi Development Authority (DDA) should be treated as 'construction' for purpose of Section 54 and 54F. While treating the allotment letter by the developer as 'construction activity', the ITAT granted the benefit of set off of capital gain to the purchaser...

Entity Operating, Developing, And Maintaining Infrastructure Facility Is Eligible For Benefit U/S 80IA Of IT Act: Pune ITAT

Referring to the decision of CIT vs. ABG Heavy Industries Ltd. (2010) 322 ITR 323, the Pune ITAT reiterated that an enterprise can claim deduction u/s 80IA if it develops, operates and maintains the infrastructure facility, subject to commencement of operation & maintenance of the infrastructure facility after April 01, 1995. The Bench of R.K. Panda (Vice President) and Astha Chandra (Judicial Member) observed that “requirement that the operation and maintenance of the...

Income Derived By Foreign Entity For Rendering Technical Assessment Services Doesn't Constitute FTS: Delhi ITAT

The Delhi ITAT held that income derived by foreign entity for rendering technical assessment services will not constitute as Fees for Technical Services (FTS) under Article 12(4)(b) of India-Singapore DTAA. The ITAT held so after finding that income was derived by Respondent/ Assessee (a Singapore based company) on account of services rendered towards technical integrity assessment/ scanning of off-shore pipelines under sea, through Magnetic Tomography Method (MTM) technology to...

Bharti Airtel Not Liable To Pay TDS Towards Remittance Of Bandwidth Charges And Agency Fees: Delhi ITAT

The Delhi ITAT held that the bandwidth charges remitted by the Appellant/ assessee (Bharti Airtel) to the non-resident service providers cannot be treated as royalty either under the applicable treaty provisions or u/s 9(1)(vi). Since bandwidth charges are not royalty, the ITAT held that assessee was not required to deduct tax at source on such receipts. Where the payment for use or right to use computer software, falls within the definition of royalty u/s 9(1)(vi) of Income tax...