Case Note & Summary
The Revenue (Pr. Commissioner of Income Tax and Asst. Commissioner of Income Tax) filed an appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITAT) dated 13.12.2024 in ITA No.1550/Bang/2024 for Assessment Year 2017-18. The ITAT had upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 12.06.2024, which partly allowed the Assessee's appeal against the Assessment Order dated 19.05.2021. The core controversy pertained to an addition of Rs. 1,44,73,422/- made by the National E-Assessment Centre, Delhi (AO) under Section 28(iv) of the Act in respect of assets received by the Assessee (M/s. Sony India Software Centre Pvt. Ltd.) from its Associated Enterprise (AE) located overseas. The Revenue argued that the assets received without consideration constituted a benefit or perquisite arising from the Assessee's business and were thus taxable under Section 28(iv). The Assessee contended that the assets were capital receipts and not in the nature of income from business or profession. The CIT(A) and ITAT both deleted the addition, holding that Section 28(iv) was not applicable. The High Court, after hearing the Revenue's counsel, found that no substantial question of law arose and dismissed the appeal, confirming the ITAT's order.
Headnote
A) Income Tax - Section 28(iv) - Benefit or perquisite - Assets received from Associated Enterprise without consideration - The court held that such assets are not taxable under Section 28(iv) as they do not constitute a 'benefit' arising from the business or profession of the Assessee, but are capital receipts not chargeable to tax. (Paras 1-3) B) Transfer Pricing - Associated Enterprise - Addition under Section 28(iv) - The Revenue's addition of Rs. 1,44,73,422/- under Section 28(iv) for assets received from AE was set aside by CIT(A) and ITAT, and the High Court upheld the deletion, finding no substantial question of law. (Paras 2-3)
Issue of Consideration
Whether assets received by the Assessee from its Associated Enterprise without consideration are taxable under Section 28(iv) of the Income Tax Act, 1961 as a benefit or perquisite arising from business or profession.
Final Decision
The High Court dismissed the appeal, finding no substantial question of law, and upheld the ITAT order deleting the addition under Section 28(iv).
Law Points
- Section 28(iv) of Income Tax Act
- 1961
- Transfer Pricing
- Associated Enterprise
- Benefit or perquisite
- Capital receipt vs revenue receipt
