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The Tribunal held that the reasons recorded for reopening the assessment beyond four years did not contain the necessary allegation that the assessee had failed to disclose fully and truly all material facts. Therefore, the reopening proceedings were considered bad in law.
The Tribunal decided the issues as follows: Regarding Ground No. 11 (Provision for Bad and Doubtful Debts): The Tribunal, referencing its decision in ACI Worldwide Solutions Pvt. Ltd. and the Karnataka High Court's decision in Principal CIT Vs. Business Process Outsourcing India Pvt. Ltd., held that the issue of comparability of this company should be sent back to the AO/TPO for fresh examination. The Tribunal also noted that the TPO himself considered provision for bad and doubtful debts as operating expenditure in the distribution segment, and by the same logic, it should be treated as part of operating cost in the hands of comparable companies. The issue was remitted to the AO/TPO for fresh consideration. Regarding Ground No. 12 (Working Capital Adjustment): The Tribunal, referencing its decision in Global e-Business Operations Pvt. Ltd., held that the issue of working capital adjustment is remitted to the file of the AO/TPO for fresh consideration to examine whether the assessee passed through all the filters adopted by the TPO. Regarding Ground No. 14 (R System International Ltd.) and Additional Ground (ISN Global Limited & Bhilwara Technology Ltd.): The Tribunal, following its decision in Global e-Business Operations Pvt. Ltd., remitted the issue of R System International Ltd. and Bhilwara Infotechnology Ltd. (referred to as Bhilwara Technology Ltd. in the additional ground) to the AO/TPO for fresh consideration to verify if they satisfy all adopted filters. For ISN Global Limited, the Tribunal, following its earlier order, directed the AO/TPO to include this company in the list of comparables as it was functionally comparable and the DRP was not justified in excluding it for the assessment year 2016-17, and by extension, for the current assessment year.
The Tribunal held that the property at C-13-1606, South City, was indeed used as self-occupied property by the assessee. The assessee provided evidence of the property's address, which was distinct from the other two flats in South City that were let out. Therefore, no income from this property should be offered. Regarding the Vayudoot Chambers property, the Tribunal ruled that the assessee is eligible for vacancy allowance under Section 23(1)(c) of the Act. The Tribunal interpreted Section 23(1)(c) to mean that if a property was let out in previous years or subsequent years, and despite best efforts remained vacant during the year under consideration, the benefit of Section 23(1)(c) should be extended. The Tribunal disagreed with the Revenue's interpretation that the property must be 'actually let' in the relevant previous year, finding it inconsistent with the phraseology of Section 23(1)(c) and the contrast with Section 23(3). The ALV of the Vayudoot Chambers property was therefore determined at Nil. The appeal of the assessee was allowed.
The Tribunal directed the AO to recompute the deduction u/s. 10A based on a High Court decision. It also addressed issues related to the rejection of books of accounts, disallowance of payments for distribution rights, and recomputation of profits from the AdWords program.
The Tribunal directed the AO to recompute the deduction u/s. 10A based on a High Court decision. It also addressed issues related to the rejection of books of accounts, disallowance of payments for distribution rights, and recomputation of profits from the AdWords program.
The Tribunal held that the PCIT's proceedings under Section 263 were justified as the AO had not made specific inquiries into the issues of payments and cash deposits. The Tribunal directed the AO to conduct fresh inquiries and verify the transactions in accordance with law and relevant circulars.
The Tribunal held that the addition on account of uncertified bills was not a mistake apparent from the record, and thus, could not be rectified under Section 154. However, the disallowance of employee contributions to EPF/ESI was considered a mistake apparent from the record.
The Tribunal held that the assessment order and reference to TPO were not bad in law, as the AO had the jurisdiction to make the reference. Regarding the comparability analysis, the Tribunal excluded 'Honeycomb Relationship Management Services Pvt Ltd' from the MSS segment as it was a full-fledged advertising service company, functionally dissimilar to the assessee. On the issue of interest on receivables, the Tribunal referred to decisions of the Special Bench and the Delhi High Court in cases like Instrumentation Corpn. Ltd. and Orange Business Services India Solutions Pvt. Ltd. It held that outstanding receivables could be considered an international transaction akin to a loan. However, it also noted that if working capital adjustment subsumes sundry creditors, then computing interest separately would lead to double taxation. The Tribunal set aside the impugned order on this issue and remitted it to the AO/TPO for fresh decision, directing that if WCA subsumes receivables, no separate characterization is needed. For receivables falling outside WCA, the interest rate should be LIBOR + 300 basis points with a 90-day credit period. The assessee was granted an opportunity to be heard. The appeal was partly allowed for statistical purposes.
The Tribunal dismissed the assessee's ground regarding the exclusion of 8 comparables based on the turnover filter, noting that most of these comparables would be excluded based on other observations. Regarding the employee cost normalization adjustment, the Tribunal rejected the assessee's claim. The Tribunal observed that the assessee's FAR analysis indicated that major risks were assumed by Indegene US, and the assessee was characterized as a limited risk-bearing company under the SWD segment, contradicting its argument of being a complete risk-bearing entity. Furthermore, the Tribunal found that while it might be possible to determine excessive employee cost for the assessee, it was not possible for the comparables as their financials did not reveal the circumstances leading to such costs. The Tribunal concluded that the computation of adjustment filed by the assessee could not be accepted as the necessary details to ascertain the actual employee cost in the comparables were not available, and therefore, a proportionate adjustment based on the absorption rate was unacceptable. Consequently, the appeal was partly allowed.
The Tribunal held that interest paid under Section 201(1A) cannot be claimed as a deduction. However, the matter was remanded to the AO to verify the exact amount of interest claimed as deduction for TDS.
The Tribunal held that if an assessee fails to maintain books of account, the obligation to get them audited under Section 44AB does not arise. Therefore, a penalty under Section 271B for non-furnishing of an audit report cannot be levied in such a situation.
The Tribunal dismissed the assessee's appeal as withdrawn due to the MAP resolution. The revenue's appeal was also dismissed as it became infructuous following the same MAP resolution.
The Tribunal dismissed the assessee's appeal as withdrawn due to the MAP resolution. The revenue's appeal was also dismissed as it became infructuous following the same MAP resolution.
The Tribunal held that the assessee is eligible for proportionate deduction under Section 54F as the entire sale proceeds were not used for new assets. However, the assessee failed to deposit the unutilized amount in the notified account due to litigation, thus not fulfilling all conditions for full exemption.
The Tribunal held that the receipts from shared services were not in the nature of Fees for Technical Services (FTS) and therefore not taxable in India. The Tribunal examined the conditions for invoking the Most Favoured Nation (MFN) clause under Circular No. 3/2022. It found that the India-Portugal DTAA, entered into after the India-Sweden DTAA, limited India's taxing rights on FTS. Portugal is an OECD member, and the protocol to the India-Sweden DTAA, which is an integral part of the convention and duly notified, allows for the import of more favorable terms from third-country treaties. The Tribunal respectfully followed its coordinate bench's decisions in the assessee's own case for subsequent years and the decision in GRI Renewable Industries vs ACIT, holding that the 'make available' condition was not satisfied. Consequently, the additions made towards FTS were deleted. The Tribunal also noted that the receipts could not be taxed as business profits as they were not attributable to a permanent establishment. Since the issue on merits was decided, the validity of the reassessment proceedings was left undecided.
The Tribunal held that the HR services provided by the assessee to its Indian group entities were purely in the nature of back-office services, such as payroll and recruitment. Citing the decision in Raymond Ltd. Vs. DCIT, the Tribunal ruled that these services did not 'make available' technical knowledge, experience, skill, know-how, or processes to the recipient entities, which is a prerequisite for classifying them as FIS under Article 12(4)(b) of the India-USA DTAA. The Tribunal found that the year-on-year rendition of services indicated that technical knowledge was not transferred for independent functioning. Therefore, the payments were not taxable as FIS or business profits attributable to a permanent establishment. The addition made by the AO was deleted. The Tribunal noted that the alternate contention regarding cost-to-cost reimbursement had become academic due to the deletion of the addition and left it undecided.
The Tribunal decided the issues as follows: Regarding the inclusion of Manipal Digital in the ITeS segment (Ground No. 8.9), the Tribunal noted that the DRP had directed the TPO to verify export earnings and exclude the comparable if it failed the export turnover criteria. However, the TPO had not considered this direction in the order giving effect. Therefore, the Tribunal remitted this issue back to the TPO to consider the DRP's directions and decide after providing an opportunity of being heard to the assessee. The principle here is that directions from higher authorities must be duly considered in subsequent orders. Regarding the exclusion of Vitae International Accounting Services P Ltd. (Ground No. 8.9), the Tribunal observed that the DRP had found the company to be in ITeS services and that its annual reports were available. The assessee's claim of insufficient data was contested. The Tribunal remitted this issue back to the TPO to examine the comparable afresh, directing the assessee to verify the annual report to substantiate its claim of functional dissimilarity and submit relevant details. This emphasizes the need for substantiation of claims by the assessee. Regarding the rejection of comparables selected by the assessee in the BPO segment (Ground No. 9.1), the Tribunal held that a company cannot be excluded simply because it does not appear in the TPO's search matrix, relying on a coordinate bench decision in Prism Networks. The issue was remitted back to the TPO for fresh examination. Regarding the exclusion of Sundaram Business Services Ltd. (Ground No. 9.2), the Tribunal found that the DRP had directed its inclusion if it passed all filters. The TPO, however, applied a net worth filter newly in the order giving effect, which was not applied during the initial TP proceedings. The Tribunal held that the TPO did not follow the DRP's directions correctly and remitted the issue back to the TPO to apply the same filter adopted during the TP proceedings. This highlights the importance of consistency in applying filters and following DRP directions. The appeal was partly allowed.
The Tribunal noted that the issue of AMP expenditure had been considered by a coordinate bench in the assessee's own case for earlier assessment years, where it was held that AMP expenditure incurred by the Indian subsidiary for the benefit of the AE, which enhanced the AE's marketing intangibles, constituted a separate international transaction. The Tribunal acknowledged this precedent. Regarding the disallowance of expenses for seminars, conventions, and sales promotion, the Tribunal observed that prior to the Supreme Court's judgment in M/s. Apex Laboratories Pvt. Ltd. v. DCIT, there were differing judicial pronouncements on the applicability of MCI regulations to pharmaceutical companies. The Tribunal found that the disallowance was made on an ad-hoc basis without critical evaluation of the expenses. In light of the Apex Court's judgment, which examined the same issue, the Tribunal decided that each expenditure needs to be evaluated to determine if the disallowance is justified. Consequently, the matter was remitted back to the AO for fresh verification of the details submitted by the assessee, in light of the Apex Court's decision, after providing an opportunity of being heard.
The Tribunal held that the HR services provided by the assessee to its Indian group entities were purely in the nature of back-office services, such as payroll and recruitment. Citing the decision in Raymond Ltd. Vs. DCIT, the Tribunal ruled that these services did not 'make available' technical knowledge, experience, skill, know-how, or processes to the recipient entities, which is a prerequisite for classifying them as FIS under Article 12(4)(b) of the India-USA DTAA. The Tribunal found that the year-on-year rendition of services indicated that technical knowledge was not transferred for independent functioning. Therefore, the payments were not taxable as FIS or business profits attributable to a permanent establishment. The addition made by the AO was deleted. The Tribunal noted that the alternate contention regarding cost-to-cost reimbursement had become academic due to the deletion of the addition and left it undecided.
The Tribunal admitted the additional grounds raised by the assessee, citing decisions of the Hon'ble Supreme Court in National Thermal Power Co. Ltd. and Jute Corporation of India Ltd. Regarding the notional interest on delayed receivables, the Tribunal did not provide a specific finding or decision in the provided excerpt, as the discussion on this issue appears to be ongoing or omitted. However, concerning depreciation on goodwill, the Tribunal held that goodwill is an intangible asset eligible for depreciation under section 32(1) of the Act, referencing several ITAT and High Court decisions. The Tribunal noted that amendments by the Finance Act, 2021, disallow depreciation on goodwill from AY 2021-22 onwards, but this does not affect prior years. The Tribunal found that the AO wrongly invoked Explanation 3 to section 43. The issue of depreciation on goodwill was remanded to the AO for verification in accordance with law, directing the AO to consider the assessee's claim as observed in its own case for AY 2016-17. This ground was allowed for statistical purposes.
The Tribunal held that since the CIT(Exemption) had condoned the delay in filing the audit report under section 119(2)(b), the assessee is entitled to the exemption under section 11, provided other conditions are met.
The Tribunal condoned the delay in filing the appeal due to health grounds. It also admitted additional grounds raised by the assessee, which were legal in nature and related to the core issues of the assessment.
The Tribunal clarified that the original order contained minor typographical errors in mentioning assessment years and specific sections of the Finance and Income Tax Acts. These errors have been corrected to ensure accuracy in the final judgment.
The Tribunal remitted the issue of comparable companies back to the Assessing Officer/Transfer Pricing Officer for fresh consideration based on publicly available information. The Tribunal also directed the Assessing Officer to allow the deduction under Section 80G after verification.
The provided text is a corrigendum to a judgment and does not contain the Tribunal's decision on any substantive issues, the reasoning behind those decisions, or the ratio decidendi. It solely addresses a typographical error in the assessee's Permanent Account Number (PAN) in the cause title of the original order. The corrigendum directs that the PAN of the assessee should be read as AADCH8710J instead of AADCH8792C. No findings on the merits of the appeal or operative directions are present in this excerpt.
The Tribunal decided on the following issues: 1. Regarding the inclusion of Micro Therapeutic Research Labs Limited as a comparable (Ground 9), the Tribunal acceded to the assessee's request and remitted the issue to the file of the AO/TPO. The AO/TPO is directed to examine whether there was operating profit in one year out of the last three preceding years. If operating profit exists in any one of those years, the company should be considered a comparable. 2. Concerning the working capital adjustment (Ground 11(a)), the Tribunal dismissed the assessee's ground. It relied on its own previous order in the assessee's own case (IT(TP)A No.3270/Bang/2018) and the case of Huawei Technologies India Pvt. Ltd. v. JCIT, which held that working capital adjustment has to be given. However, the operative part of the judgment indicates this ground was dismissed, implying the Tribunal followed the DRP's reasoning in this specific instance, which rejected the adjustment due to lack of demonstrable impact and difficulty in making a reasonably accurate adjustment. 3. On the issue of interest on outstanding receivables (Ground 13), the Tribunal referred to its decision in ING Novosoft Technologies Ltd. and the Bombay High Court's decision in Aurionpro Solutions Ltd. The issue was remitted to the file of the AO/TPO to determine the Arm's Length Price (ALP) after considering that interest on receivables should be restricted to LIBOR + 2%. The TPO is to compute interest only for the relevant assessment year, considering relevant agreements.
The Tribunal decided the issues as follows: Regarding the transfer pricing adjustment for the software development segment (Issue 1), the Tribunal did not provide a specific finding or decision in the provided excerpt. The grounds related to this issue were extensively detailed by the assessee, but the Tribunal's ruling on these specific points is not present in the excerpt. It appears the focus of the provided text is on the interest on notional receivables. Regarding the addition on account of notional interest imputed on outstanding receivables from AEs (Issue 2), the Tribunal set aside the impugned order and remitted the matter to the AO/TPO for fresh adjudication. The Tribunal held that outstanding sums of invoices are akin to a loan advanced by the assessee to its foreign AE, thus constituting an international transaction as per the explanation to Section 92B. However, it also noted that computing interest on outstanding receivables and loans/advances as an international transaction could amount to double taxation if working capital adjustments subsume sundry creditors. The Tribunal directed the AO/TPO to consider if the Working Capital Adjustment (WCA) subsumes the outstanding receivables. If WCA subsumes them, no separate characterization is to be made. For receivables falling outside WCA, the rate of interest must be LIBOR + 300 basis points, considering a credit of 90 days, in line with CIT vs. Cotton Naturals (I) Pvt. Ltd. The assessee is to be given an opportunity of being heard. This ground was partly allowed.
The Tribunal held that outstanding receivables from associated enterprises (AEs) constitute an international transaction. However, it remitted the issue of benchmarking the interest rate back to the AO/TPO for proper TP study, considering credit periods and applicable LIBOR rates, and to compute interest only for the relevant assessment year.
The Tribunal upheld the addition of the cash as undisclosed income. It found that the cash book was prepared post-search and lacked verifiability, and the assessee's claim of pressure during statement recording was unsubstantiated.
The Tribunal clarified that the original order contained minor typographical errors in mentioning assessment years and specific sections of the Finance and Income Tax Acts. These errors have been corrected to ensure accuracy in the final judgment.
The Tribunal clarified that the original order contained minor typographical errors in mentioning assessment years and specific sections of the Finance and Income Tax Acts. These errors have been corrected to ensure accuracy in the final judgment.
The Tribunal clarified that the original order contained minor typographical errors in mentioning assessment years and specific sections of the Finance and Income Tax Acts. These errors have been corrected to ensure accuracy in the final judgment.
The Tribunal held that the rejection of the Internal CUP method by the AO/DRP/TPO was not justified without cogent reasons. It also addressed issues related to AMP expenditure and foreign exchange losses.
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order regarding bad debts. However, the High Court later remanded the matter for reconsideration of the cross-objection and a specific bad debt addition.
The Tribunal held that interest on outstanding receivables should be treated as an international transaction, but remanded the issue to the AO/TPO for fresh consideration. It also directed that if working capital adjustment subsumes receivables, no separate characterization is needed.
The Tribunal held that the assessee's gross turnover, comprising commission and interest income, was Rs. 92,22,002, which was below the threshold for mandatory tax audit under Section 44AB. Therefore, the penalty under Section 271B was not leviable.
The Tribunal held that while the assessee failed to meet the conditions for exemption under Section 11 due to late filing, tax should be computed on the net income after deducting expenses, not on the gross receipts. Since the assessee incurred a loss, no tax was leviable on the gross receipts.
The Tribunal addressed the grounds raised by the assessee. Regarding the Transfer Pricing issues, the Tribunal noted that grounds 1.1 to 1.10 were not argued by the assessee's Authorized Representative and were therefore dismissed as not pressed. Ground 1.11 concerning the computation of operating profit was also not pressed. Grounds 1.15 to 1.17 regarding the selection and rejection of comparable companies were also not argued and thus dismissed. However, the Tribunal specifically dealt with ground 1.13 concerning working capital adjustment. The Tribunal held that the CIT(A) was not justified in denying adjustment on account of working capital. Citing the case of ITO Vs. E Value Serve.com, the Tribunal found merit in allowing working capital adjustment, stating that insisting on daily balances is improper and that adjustments should be based on opening and closing working capital. The Tribunal directed the AO/TPO to grant the working capital adjustment as claimed by the assessee. Regarding the disallowance of ESOP expenditure (Ground 2.1 to 2.8), these grounds were also not argued by the assessee and were dismissed as not pressed. Grounds related to adjustments made by the Central Processing Centre (Ground 3.1 to 3.4) were dismissed as they did not arise from the order of the AO/TPO/DRP and the assessee had an alternate remedy. Consequential grounds (4.1 to 4.4) were also dismissed. The overall result was that the grounds raised by the assessee were partly allowed for statistical purposes.
The Tribunal noted that the assessee, an NRI, did not get sufficient time to submit documents before the CIT(A) and that the assessment was completed ex-parte. Therefore, the matter was restored to the AO for fresh consideration with a cost imposed on the assessee.
The Tribunal held that the addition made by the CPC under Section 143(1) was unsustainable as the same issue was accepted in the scrutiny assessment under Section 143(3). Therefore, the CIT(A)'s order dismissing the appeal in limine was rendered infructuous.
The Tribunal condoned the delay in filing the appeal and restored the matter to the Assessing Officer for fresh consideration. This was based on the assessee's undertaking to properly represent the case and produce necessary documents.
The Tribunal held that the sale of land was indeed in the individual capacity of the assessee, and capital gains arising from it were rightly assessed in his hands. Regarding the flats, the Tribunal noted the assessee's argument about the date of agreement for sale consideration but did not provide a final decision on this point in the provided excerpt.
The Tribunal noted that the assessee, an NRI, did not get sufficient time to submit documents before the CIT(A) and that the assessment was completed ex-parte. Therefore, the matter was restored to the AO for fresh consideration with a cost imposed on the assessee.
The Tribunal held that the assessee had sufficient cause for the delay in filing the appeal before the CIT(A) due to pursuing an alternative remedy and the impact of the Covid-19 pandemic. The delay was condoned, and the matter was remitted to the CIT(A) for adjudication on merits.
The Tribunal found that some payments were belatedly made and directed the CIT(A) to verify all payments against challans. The disallowance should only be made for belated contributions, while timely payments are to be allowed.
The Tribunal noted that the Assessing Officer had passed an order giving effect to a previous ITAT order, rendering the grounds of appeal academic. The Tribunal accepted the assessee's prayer for withdrawal.
The Tribunal decided on the issues as follows: Regarding the TP adjustment (Issue 1), the Tribunal noted the DRP's finding and the assessee's argument regarding segmental financials. However, the judgment text provided is incomplete, and the specific finding on this issue is not fully recorded. For the disallowance under section 14A (Issue 2), following a coordinate bench decision in the assessee's own case for AY 2017-18, the Tribunal remitted the issue back to the DRP to examine the financials and determine if any disallowance was warranted, stating that if no exempt income was earned, no disallowance could be made. For the disallowances under sections 40(a)(i), 40(a)(ia), and 37 (Issue 3), the Tribunal found merit in the assessee's contention of double disallowance and remitted the issue back to the DRP to examine and delete the disallowance accordingly. For the disallowance under section 43B (Issue 4), the Tribunal noted that the lower authorities made the disallowance due to a lack of documentary evidence explaining the difference between the tax audit report and other information. The Tribunal remitted this issue back to the DRP to consider the assessee's submissions afresh and allow the claim based on evidence in accordance with the law, granting the assessee a reasonable opportunity of being heard. The operative direction for the TP adjustment is not fully clear from the provided text, but the other issues were remitted.
The Tribunal held that the interest paid on CCDs cannot be treated as interest on equity until the date of conversion. Following the decision of a coordinate bench in the assessee's own case for earlier years, the Tribunal held that interest paid on debentures is allowable as expenditure under Section 36(1)(iii). Regarding the determination of the ALP of the interest on CCDs, the Tribunal noted that there was no clear decision on this aspect by the lower authorities in any year. Referencing an order giving effect for AY 2010-11 where the TPO applied the SBI PLR, the Tribunal remitted the issue back to the TPO to apply the appropriate SBI PLR rate to determine the ALP, ensuring the assessee is given an opportunity to be heard. For the issue of set-off of brought forward business loss and unabsorbed depreciation, the Tribunal directed the AO to consider these losses and allow set-off in accordance with the law. The appeal was allowed.
The Tribunal allowed the deletion of disallowance made by the AO regarding depreciation under Section 40(a)(i). It also directed the AO to follow DRP directions regarding depreciation on software expenses, allowing the ground for statistical purposes.
The Tribunal noted that CBDT Instruction No. 1916/1994, which provides benefits for gold purchases for family members, was not properly considered. Since the number of family members and the exact quantity of gold purchased were unclear, the issue was remitted back to the Assessing Officer.