ACIT Vs Sony India Software Centre Pvt. Ltd. (ITAT Bangalore)
ITAT Bangalore held that addition under section 28(iv) of the Income Tax Act for receiving fixed assets from sister concern on free of cost basis unjustified as no benefit is derived from the same. Accordingly, order of CIT(A) upheld and appeal of revenue dismissed.
Facts- The assessee company is engaged in the business of providing software development services. During the course of assessment proceedings, it was found that assessee has received certain assets free of cost from various sister groups located outside India. These AEs are clients of assessee and assessee is providing services to them. The assessee was asked to explain the nature and purposes of the goods received free of cost and why the same should not be considered as benefits arising to assessee and chargeable to tax u/s 28 (iv) of the Act.
AO did not accept the explanation of assessee, according to the AO, assessee has derived immense benefit on receiving such assets free of cost and by not having purchased the intellectual property related items, assessee has avoided payment of TDS on the same and therefore income is required to be taxed in the hands of assessee u/s. 28(iv) of the Act. CIT(A) deleted the addition.
