Assessee Entitled To Charge Depreciation On Purchase Of Goodwill: Delhi High Court

The Delhi High Court has made it clear that goodwill is not 'income' but rather 'expenditure' for acquisition of assets and therefore, an assessee is entitled to charge depreciation on the amount spent towards it.A division bench of Justices Vibhu Bakhru and Swarana Kanta Sharma cited Commissioner of Income Tax, Kolkata v. Smifs Securities Ltd. (2012) whereby the Supreme Court had held that goodwill could be considered as an intangible asset eligible for depreciation.In the case at hand, the...

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...

Similarity Of Functional Filters & Business Model Is Necessary For Including/ Excluding Comparable To Determine Arm's Length Price: Delhi HC

The Delhi High Court noted that the present appeal is confined only to inclusion/ exclusion of certain uncontrolled entities as comparable for purpose of determining arm's length price (ALP) of assessee company/ Appellant.Further, for purposes of benchmarking, there must be similarity of functional filters, product homogeneity and business model, in order to arrive at suitable comparable for determination of arm's length price, added the Court. Hence, the High Court remanded the matter back 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 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 ...

Banks Can Claim Tax Deductions For Broken Period Interest On HTM Securities If Held As Trading Assets: Supreme Court

The Supreme Court on Wednesday (October 16) held that banks can claim tax deductions for broken period interest on held to maturity (HTM) government securities if they are held as trading asset. “Therefore, on facts, if it is found that HTM Security is held as an investment, the benefit of broken period interest will not be available. The position will be otherwise if it is held as a trading asset”, the Court held. A bench of Justice Abhay Oka and Justice Pankaj Mithal observed that...

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...

SCN Was 'Gloriously Silent' On Provisions Of GST Act Which Were Allegedly Infringed: Delhi High Court Quashes Order

Finding that the SCN as well as the final order fails to provide any clue with respect to the provision of the statute which was alleged to have been violated or infringed, the Delhi High Court quashes the SCN & the order of cancellation of GST registration. “The SCN is gloriously silent with respect to the provisions of the GST Act which are alleged to have been violated or infringed”, observed the Division Bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja. ...

Value Of Free Fuel Can't Be Added To Value Of Taxable Supply U/S 15 Of CGST Act: Uttarakhand HC

The Uttarakhand High Court held that when as per the agreement, the cost of fuel was to be borne by recipient, then such cost cannot be subjected to charge of GST by adding its value in the transaction value of GTA service.Pointing that the cost of fuel cannot be added in the account of the transporter, as was governed by the GST rules, the Division Bench comprising Justice Ritu Bahri and Justice Rakesh Thapliyal observed that “value of free fuel cannot be added to value of taxable supply under...

Rejection Of Application For Voluntary Cancellation Of GST Registration Didn't Contain Reasons: Bombay HC Quashes Rejection Order

The Bombay High Court ruled that since the revocation orders for registration cancellation on petitioner's application were passed contrary to principles of natural justice, all the subsequent proceedings initiated thereafter, which are consequential, shall be quashed.“Before the revocation of cancellation of registration, the Petitioner was not supplied with the documents on the basis of which its application for cancellation of registration was rejected, which is contrary to the principles of...