TaxTMI 
TaxTMI 
2016 (5) TMI 334
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.... and IJT Plastics and Tools Private Ltd. are exempted from taxation. According to the Ld. representative, no income was derived from these investments during the year under consideration. Placing his reliance on the judgment of Delhi High Court in Cheminvest Limited v. CIT (2015) 94 CCH 2, the Ld. representative submitted that when the assessee had not earned any taxable income during the year under consideration, then the corresponding expenditure cannot be worked out for disallowance. Therefore, according to the Ld. representative, there is no question of disallowance under Section 14A of the Act, especially when there was no income earned by the assessee from the investments made. According to the Ld. representative, the Delhi High Court reversed the decision of Special Bench of this Tribunal in I.T.A. No.87/DEL/2008. 4. The Ld. representative further submitted that the investments were made not for the purpose of earning any exempt income but for the purpose of business expediency. According to the Ld. D.R., both Bosh Electrical Drives India Private Ltd. and IJT Plastics and Tools Private Ltd. are sister concerns of the assessee, therefore, the investments were made due to c....
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....rted the funds for non-business purposes. Therefore, in view of the judgment of Apex Court in S.A. Builders Ltd. v. CIT (2007) 288 ITR 1, this Tribunal is of the considered opinion that the investments made by the assessee in the equity shares of the sister concerns, which were established by joint venture, have to be necessarily treated as for business purpose. Therefore, as rightly found by this Tribunal by majority decision in EIH Associated Hotels Ltd. (supra), the dividend income earned by the assessee, if any, from subsidiary companies, is incidental one, therefore, the investments made by the assessee in its subsidiary companies cannot be reckoned for disallowance under Section 14A of the Act. A similar view was taken by Delhi High Court in CIT v. Oriental Structural Engineers Pvt. Ltd. in ITA 605/2012 dated 15.01.2013, a copy of which is available at page 80 of the paper-book. The Mumbai Bench of this Tribunal in JM Financial Ltd. v. Addl. CIT in ITA No.4521/Mum/2012 has also taken a similar view. The assessee has produced a copy of the order at page 93 of the paper-book. The assessee has also placed reliance on the decision of Delhi Bench of this Tribunal in Interglobe Ent....
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....tative submitted that this TVS group of company was established more than 50 years ago and they have made their market in the automobile industry. However, the assesseecompany is relatively a new entrant to the industry. The exports of Lucas TVS Ltd. are limited when compared to the assesseecompany. The product application of Lucas TVS Ltd. is for commercial vehicles, cars, two wheelers, tractors etc., whereas the product application of the assessee-company is only in cars. Therefore, according to the Ld. representative, there is no functional similarity between the assessee and the comparable selected by the Transfer Pricing Officer, namely Lucas TVS. The Ld. representative further submitted that the Lucas TVS has after sales presence in India, whereas, the assessee-company is not providing any after sales service. Lucas TVS has transactions with related parties, namely, subsidiaries. Lucas TVS sells directly to the companies like Tata Motors, Mahindra, etc. However, the assessee-company sells the manufactured products to their own vendors. Thus, there is a vast difference in the business model of Lucas TVS and the assessee-company. 10. Referring to the order of the Dispute Res....
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....on upto 25% is permissible at threshold level for TP study. According to the Ld. D.R., comparables being very limited, related party transaction would also be permissible upto the level of 25%. Referring to the internal comparables, the Ld. D.R. submitted that the available internal comparable cannot be considered for determining the Arm's Length Price. According to the Ld. D.R., only external comparable has to be considered for making adjustment while determining the Arm's Length Price of the transaction of the assessee. Therefore, according to the Ld. D.R., the DRP has rightly confirmed the order of the Transfer Pricing Officer. 14. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee is manufacturing DC micro motors and sub-assemblies for DC motors. The assessee selected three comparables, namely, Sibar Auto Parts Ltd., K.S. Diesels Ltd. and Suyaan Transmissions Ltd. From the product details, it appears Sibar Auto Parts Ltd. is manufacturing aluminium hard chrome plated cylinder kits, cylinder blocks, blind-end cylinder blocks, air cooler cylinder heads and water cooled cylinders. This ....