TaxTMI 
TaxTMI 
2013 (9) TMI 12
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....e grounds of appeal. Ground no. 1, 2 & 3 relate to Corporate taxes whereas grounds no. 4, 5 & 6 relates to Transfer Pricing issue. 3. We first take-up Transfer Pricing issues raised vide grounds no. 4, 5 & 6. 4. Briefly stated the facts of the case are that Ciba India Limited (CIL) is a Public Limited Company engaged in manufacture and trade of specialty chemicals. It was formed in 1996 after having off of the Specialty Chemicals Undertaking of Hindustan Ciba Geigy Ltd. (HCGL). During February 1998, RBI post on an application from the assessee transferred the RBI approval in the name of CIL. Pursuant to receipt of RBI approval CIL entered into a Technology Transfer Agreement dated 15.02.1999 with Ciba Specialty Chemicals Inc. based at Switzerland (Ciba basel) to provide CIL with an exclusive non- transfer license to use plant, technology for manufacture of certain finished goods. The terms of approval was modified by the RBI vide letter dated 15.03.2000 to pay royalty @ 4% of all domestic and export sales for a period of 7 years. The assessee, in the Transfer Pricing Study Report, documented the bench marking analysis to all payment of royalty made to Ciba basel by adopting a....
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....4.46% on export sales and (ii) 4.01% on domestic sales. Against this approach of the assessee, the TPO has placed reliance on TNMM without analyzing the suitability or giving any specific reasons for rejection of the CUP provided by the assessee. The A.O. on the basis of TNMM analysis, has come to a conclusion that in order to be able to achieve comparable margin of 5.83%, the expense will have to be reduced and on that basis the royalty will have to be determined at 'nil' value. The method adopted by the TPO is not reasonable in as much as the required reduction in the cost cannot be made only in respect of only one international transaction, whereas the assessee has entered into as many as 16 international transactions. It is also seen that the TPO has accepted the CUP method in respect of agency commission. Therefore, it does not appear reasonable to treat the value of royalty at 'nil' on the basis of comparable margin. Since the CUP method has already been accepted in the case of agency commission and other charges, the TPO is directed to examine the CUP as offered by the assessee in its TP report and adjustment if any required should be made on that....
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....nding. The CIT(A) directed the AO to allow the claim of deduction of Rs. 6,17,317/- being loan given to Mr. Rajan Chourse as the same has been recovered in the subsequent year. However, the CIT(A) confirmed the disallowance of Rs. 4,67,633/- being loan to another employee and also confirmed the advances of Rs. 1,55,904/-. 15. The assessee is before us against this finding of the CIT(A). 16. Before us, the Ld. Counsel reiterated that the loans and miscellaneous advances were given in the ordinary course of business, therefore, the same should be allowed as a business loss. The Counsel relied upon the decision of the Mumbai Bench, in the case of Edelweiss Capital Ltd. in ITA no. 3971/Mum/2009 wherein, the Tribunal has allowed the advances. The DR strongly supported the findings of the lower authorities. 17. We have considered the rival submissions and perused the orders of the lower authorities and also the order of the Tribunal relied upon by the Counsel. We find that the Tribunal in ITA no. 3971 has allowed write-off of the advances as a business loss. Since there is no dispute in the present case that the advances have been given in the ordinary course of business. Respec....
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..... Counsel for the assessee has reiterated what has been submitted before the lower authorities. The Counsel further relied on the decision in the case of Pfizer Ltd. 233 CTR 521 (Bom) exhibited on page 112 of the Paper book. The DR strongly supported the findings of the lower authorities. 23. We have considered the rival submissions and perused the orders of the lower authorities and the decision relied upon by the Counsel. We find that the AO has rejected the claim of the assessee in a summary manner without considering the nature of each item of income vis-a-viz business of the assessee. The CIT(A) has also confirmed the assessment without considering the nature of each receipts, therefore, in the interest of justice, we restore this issue back to the files of the AO. The AO is directed to verify each item before coming to any conclusion and after giving a reasonable opportunity of being heard to the assessee. 24. Ground no. 2 is accordingly allowed for statistical purposes. 25. Ground no. 3 relates to exclusion of the following items of income which are set off against the expenses apportioned to industrial undertaking, from the eligible profits of the industrial undert....
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....ed in rejecting the claim of the assessee in a summary manner except for three items on which the CIT(A) has given relief to the assessee. In the interest of justice and fair play, we restore this issue back to the files of the AO, the AO is directed to decide this issue afresh in the light of the decision of the Hon'ble jurisdictional High Court in the case of Associated Capsules Pvt. Ltd., 332 ITR 43 after giving a reasonable opportunity of being heard to the assessee. 31. Ground no. 3 is allowed for statistical purposes. 32. The assessee has also raised one additional ground by which it is pleaded that 90% of net amount should be excluded while computing the profits of the business for the purpose of deduction u/s 80HHC of the Act. 33. Following our findings for ground no. 2, hereinabove, we restore this issue back to the files of the AO to allow netting of interest before excluding 90% of net amount, if required. 34. Additional ground is also allowed for statistical purposes. 35. In the result, appeal filed by the assessee is partly allowed. ITA 7528/Mum/2010, Revenue's appeal, AY 2002-03: 36. The only grievance of the revenue is that the CIT(A) has....
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....1-02 (supra) we do not find any reason to interfere with the order of the CIT(A). Ground no. 1 is accordingly dismissed. 48. Ground no. 2 relates to the charging of interest u/s 234D. 49. The issue identical to revenue's appeal in ITA 7528/Mum/2010 wherein, we have followed the decision of the Hon'ble jurisdictional High Court in 25 taxmann.com284, the AO is directed to follow the same. Ground no. 2 is allowed. 50. In the result, appeal of the revenue is partly allowed. CO 174/Mum/2012 by the Assessee for AY 2003-04: 51. Ground no. 1 relates to the back wages. 52. This issue has already been decided in favour of the assessee vide ground no. 1 in ITA 7529, therefore, this grievance becomes otiose. 53. Ground no. 2 relates to charging of interest u/s 234D. 54. This issue has been decided in favour of the revenue, vide ground 2 of ITA 7529/Mum/2010. The CO is accordingly dismissed. 55. In the result, assessee's C.O. stands dismissed. ITA 792/Mum/2011, Assessee's appeal, AY 2005-06: 56. Ground no. 1 & 2 are not pressed and are accordingly dismissed. 57. Ground no. 3 & 4 relates to the Transfer Pricing issue. 58 Facts and circumstan....