TaxTMI 
TaxTMI 
2009 (7) TMI 862
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....d order. 2. The grievances raised in these appeals are as follows : ITA No. 1073/Pune/2007 (assessee's appeal) "1. The learned CIT(A)-I has erred in disallowing part of royalty payments made to Ebara Corporation, Japan amounting to Rs. 4,59,451 on the ground that the appellant has failed to prove that the case of the appellant is distinguishable from the other two licensee companies. He has failed to consider and appreciate correctly the submissions made by the assessee before him. 2. The learned CIT(A)-I has erred in concluding that software expenses of Rs. 3,36,375 incurred towards acquisition of windows software have created enduring benefit and thereby treating the same as capital expenditure, ignoring....
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....edings before the TPO, it was noted that the assessee's Japanese collaborator charged royalty at the rate of 3 per cent from two of its group companies based in China i.e., Ebara Great Pumps Co. Ltd., China and Ebara Boshan Pump Co. Ltd., China. Based on these facts and having taken note of the situation that the assessee was paying 4 per cent royalty to Ebara Corporation, Japan, the TPO made an adjustment of Rs. 459,451 in ALP for the royalty. According to the TPO the ALP of the royalty ought to have been 3 per cent as against 4 per cent paid by the assessee. The TPO has also observed that research and development cess on the royalty which amounted to Rs. 91,891 also needs to be adjusted in the ALP because this was a liability on the recip....
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....controvert the above finding nor is it the case of the revenue that there is any legal basis for TPO's inference to the effect that the research and development cess is the liability of the foreign concern earning royalty, from India. The very foundation of adjustment made by the TPO is thus devoid of legally sustainable basis. We are therefore, in agreement with the conclusion arrived at by the CIT(A) to the extent that since research and development cess liability is payable by the assessee who imports technology no adjustment in the same can be made in the computation of arm's length price for royalty. 6. Coming to the grievance raised by the assessee, we have noted that assessee's elaborate submission pointing out that the very b....
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.... loans paid to employees amounting to Rs. 33,398 ought to have been reduced. As far as this issue is concerned, the short reason for which the CIT(A) has decided the issue against the assessee is that "the appellant has failed to establish that interest received on loans given to the employees formed part of its business activities." Even a plain reading of this reasoning would show that the matter has been dealt with at a very superficial level. Once it is not in dispute that interest is received on the loans given to the employees it is difficult (sic) to come to the conclusion that such interest earning is nothing but a receipt in the course of normal business; it is a normal commercial practice to grant loans to the employees from time ....