TaxTMI 
TaxTMI 
TaxTMI 
2014 (6) TMI 708
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....velopment of integrated township and sale of flats. Return of income was filed by the Respondent on 21.10.2005 declaring a total loss of Rs. 1,10,52,094/-. 3. As against the said return of income, the original assessment was completed u/s. 143(3) of the Income Tax Act, 1961 vide order dated 12.12.2008 at a total income of Rs. 13,62,89,230/-. The disparity between the returned income and assessed income was on account of the fact that income had been estimated at 8% of the contract receipts. However, on appeal before the learned CIT (Appeals), the addition was deleted vide order dated 06.02.2012. 4. Subsequently, a notice u/s. 148 of the Income Tax Act, 1961 dated 29.03.2011 was issued by the learned Assessing Officer. In response to this notice, the assessee had filed the same return of income as original return of income and requested for furnishing of reasons recorded for issuance of notice u/s. 148 of the Income Tax Act, 1961. Despite this specific request, vide its letter dated 27.02.2012, no reasons recorded were furnished to the Respondent. 5. Subsequently, a draft assessment order u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 dated 13.02.2013 was received by the ass....
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....t of the specified transaction can be used only for the purpose of examining whether such transaction constitutes on 'international transaction' under section 928(i). In case section 928(1) is not attracted, the fiction under section 928(2) ceases to operate. In our opinion, the impugned transaction between the Appellant and IJMll does not fall under section 928(2). This is for the following reasons: (a) Both the Appellant and IJMII are residents of India for the purposes. They pay their taxes in India. To fall under 92B(1), the international transaction has to be between associated enterprises, at least one of whom is a non-resident. As both the parties are residents, the transaction between the Appellant and IJMII do not constitute on international transaction. Thus the basic premise for invoking the deeming fiction under section 92B(2) does not arise. (b) Tile transaction in question did not involve transfer of goods or services from the Appellant to IJM Group or to any other nonresident enterprise, either directly or indirectly, or by using IJMII as an intermediary. The transaction in question involved direct rendering of services by IJMII to the Appellant. (c) The A....
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....ee and IJMII fall under section 92B(2) of the Act. He contended that the order of the DRP may be cancelled. 10. The learned AR of the assessee on the other had relied upon the order of the DRP and following the decisions in support of assessee's case: 1. C.G. Electronics (India) Pvt. Ltd. Vs. ACIT (Delhi), 140 ITD 41 (SB). 2. Kodak India Pvt. Ltd. Vs. Addl. CIT (Mum.), 155 TTJ 697 3. Assessee's own case for AY 2007-08 reported in 156 TTJ 574 (Hyd.) 11. We have heard both the parties, perused the record and have gone through the orders of the authorities. Admittedly this issue came up for consideration before this Tribunal in assessee's own case for AY 2007-08 in ITA No. 2072/Hyd/2011 and vide its order dated 31/12/2012, the coordinate bench held as follows: "28. We have heard both the parties and perused the material on record. The learned counsel for the assessee made a lengthy argument on the transfer pricing. After considering the entire facts and circumstances of the case and the findings of the DRP, we are of the opinion that the transaction taken place is with domestic enterprises and at least one among the AEs are not non-resident. Both the assessee and IJMII are the r....
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....l) if the conditions contained in section 92B(2) are attracted. Section 92B(2) provides: "(2) A transaction entered into by an enterprise with a person other than an associated enterprise shall, for the purposes of subsection (1), be deemed to be a transaction entered into between two associated enterprises, if there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined in substance between such other person and the associated enterprise." 28.4 Section 92B(2) embodies a legal fiction. It deems a transaction to have been entered into between two associated enterprises. Though section 92B(2) is a part of section 92B with the heading "Definition of international transaction", it is to be read as an extension of section 92A(2) and not as an extension of section 92B(1). This is for the following reasons: (a) Both section 92A(2) and 92B(2) deal with situations under which two or more persons constitute associated enterprises. (b) Section 92B(1) does not define the term "associated enterprise". It defines the term "international transaction". This definition prov....
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....ction' under section 92B(1). In case section 92B(1) is not attracted, the fiction under section 92B(2) ceases to operate. In our opinion, the impugned transaction between the assessee and IJMII does not fall under section 92B(2). This is for the following reasons. (a) Both the assessee and IJMII are residents of India for tax purposes. They pay their taxes in India. To fall under 92B(1), the international transaction has to be between associated enterprises, at least one of whom is a nonresident. As both the parties are residents, the transaction between the assessee and IJMII do not constitute an international transaction. Thus the basic premise for invoking the deeming fiction under section 92B(2) does not arise. (b) The transaction in question did not involve transfer of goods or services from the assessee to IJM Group or to any other non-resident enterprise, either directly or indirectly, or by using IJMII as an intermediary. The transaction in question involved direct rendering of services by IJMII to the assessee. (c) The APHB came into existence under the A.P. Housing Board Act, 1956. It performs governmental functions. Its policies are directly controlled by t....