Transactions Between Holding & Subsidiary For Issuance Of Shares Not Covered U/S 56(2)(viib) Of IT Act: Delhi ITAT Quashes Revision Against OYO

The Delhi ITAT held that the transactions between holding and its wholly owned subsidiary entity towards issuance of shares are not covered within ambit of Sec 56(2)(viib) in absence of any benefit arising from such transactions. Referring to the Coordinate Benchs, the Bench of Pradip Kumar Kedia (Accountant Member) and Yogesh Kumar US (Judicial Member) reiterated that Sec...

[IT Act] Section 80IB Doesn't Mandate Setting Off Losses Of One Eligible Unit Against Profits Of Another Eligible Unit: Mumbai ITAT

The Mumbai ITAT recently clarified that an industrial undertaking was not required to set off the losses incurred by it in one eligible unit against the profits earned from another eligible unit for the purpose of calculating deduction u/s 80-IB.As per Section 80-I of Income tax Act, 1961, where the gross total income of an assessee includes any profits and gains derived from an...

Genuine Short-Term Capital Loss From Sale Of Shares Can't Be Prevented From Being Set Off Against Long-Term Capital Gain: Mumbai ITAT

The Mumbai ITAT held that a taxpayer is not prevented from arranging her affairs within the legal framework and through legitimate means to reduce his tax liability.While pointing that the Income Tax Statute does not require the assessee to pay more tax, the Division Bench of Saktijit Dey (Vice President) and Amarjit Singh (Accountant Member) observed that “short-term capital loss derived...

Residence Country Can't Deny Credit On Taxes Levied By Source Country: Mumbai ITAT Grants Treaty Benefit To Amarchand Mangaldas

The Mumbai ITAT ruled that tax credit cannot be denied in cases where the interpretation of the residence country about the applicability of a treaty provision is not the same as that of source jurisdiction about the provision and yet the source country had levied taxes directly or by way of tax withholding. The Bench of Beena Pillai (Judicial Member) and Ratnesh Nandan...

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...

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...

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...

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...

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...

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...

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...

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...