INCOME TAX
Only Requirement To Be Fulfilled For Claiming Expenses U/s 57(Iii) Is That They Must Be Incurred Wholly For Earning Income From Other Sources: Ahmedabad ITAT
The Ahmedabad ITAT held that in the absence of the Assessing Officer pointing out as to how despite the assessee's explanation, there was no nexus between the interest-bearing funds and their utilization for making advances for earning interest income, no disallowance u/s 57(iii) of the Income tax Act was tenable. The ITAT explained that the only requirement to be fulfilled for...
Failure To Record Satisfaction Before Initiating Penalty U/s 271(1)(C) In Gross Violation Of CBDT Circular, Vitiates Penalty Order: Chennai ITAT
The Chennai ITAT clarified that the Assessing Officer has to record his satisfaction before initiating penalty under section 271D of the Income tax Act in respect of violation of the provisions of section 269SS of the Act. As per the provision of Section 269SS, the assessee had to explain the bonafide or genuineness of the cash transaction towards payment of interest in cash, added...
AO Can Make Addition Of Unexplained Cash Credit U/s 68 Only In Previous Year In Which Such Cash Credit Was Made And Assessee Fails To Explain Same: Mumbai ITAT
The Mumbai ITAT clarified that as per the provisions of Section 68 of the Income tax Act, the Assessing Officer is required to make addition of unexplained cash credit only in the previous year in which such cash credit has been made and the assessee is not in a position to offer satisfactory explanation relating thereto. The Bench of Vikas Awasthy (Judicial Member) and...
If Employees' Contributions Are Not Paid Within Due Dates Specified Under PF Act, Then Employer Is Not Entitled To Deduction U/s 36(1)(Va): Bangalore ITAT
The Bangalore ITAT reiterated that the distinction between an employer's contribution which is its primary liability under law, in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it is crucial. The former forms part of the employers' income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x)...
Typographical Error In Mentioning Incorrect Amount Of Expenses In Form 3CD Doesn't Permit AO For Any Addition To Assessee's Income: Chennai ITAT
The Chennai ITAT explained that a typographical error in mentioning incorrect amount of expenses in Form 3CD does not call for any addition by the Assessing Officer to assessee's income. The Bench of Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) observed that “details were available before the CIT(A) at the time of hearing and complete details which...
Ahmedabad ITAT Explains Difference Between Letter Of Credit From Corporate Guarantee
While upholding ALP adjustment on LOC in case of Axis Bank, the Ahmedabad ITAT rules on difference between letter of comfort (LOC) and guarantee commission. With respect to LOC being equated to bank guarantees, the Bench comprising Annapurna Gupta (Accountant Member) and T.R Senthil (Judicial Member) explains that bank guarantee is a kind of guarantee from a lending organization to...
Volume Discount & Geography Adjustments Shall Be Considered While Determining TP Adjustment: Ahmedabad ITAT
The Ahmedabad ITAT remitted the issue of granting business volume discount adjustment and geographical difference adjustment for determination of ALP in case of company engaged in the business of manufacturing chemicals like dyes, agro chemicals, bulk drugs, commodity chemicals and intermediates. While referring to the Coordinate bench ruling in assessee's own case for AY 2006-07,...
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)...
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...
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...
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...
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,...