TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 632
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....ement Cost/Corporate Management Cost) at Nil. 2.2 The learned Addl. CIT/DRP erred in ignoring the evidences submitted before them. 2.3 The learned Addl. CIT/DRP erred in upholding the transfer pricing adjustment, in law and on facts, in respect the appellant's transactions with its associated enterprise in relation to management charges. 2.4 The learned Addl. CIT/DRP erred in disregarding the cost allocation on the basis that no services were provided to the appellant. 2.5 The learned Addl. CIT/DRP erred in not taking cognizance of the various evidences submitted by the appellant to prove the rendition of services and the benefit received in the right perspective. 2.6 The learned Addl. CIT/DRP erred in disregarding the economic analysis undertaken by the appellant and erroneously selecting Comparable Uncontrolled Price Method as the most appropriate method for benchmarking the management services received by the appellant without providing any comparable uncontrolled transaction for the computation of arm's length price. 2.7 The learned Addl. CIT/DRP erred in failing to appreciate that the allocation of management charges was not adhoc and was based on scientifi....
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....kdrop and having held that no services were rendered by the AE, the TPO determined the arm's length price of the services as NIL. Aggrieved, assessee raised an objection before the DRP but without any success 6. The assessee is aggrieved and is in appeal before us. 7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 8. We have noted that learned counsel for the assesse has fairly accepted that the assessee could not lead the necessary evidence, in support of rendition of services, at the assessment stage, and it was only before the DRP that the assessee could produce the evidence. He submits that this was the first year for payment of management services and that there were genuine difficulties preventing the assessee from submission of these details at the assessment stage. He has now submitted voluminous evidences before us but, in our considered with you, the right course of action will be that all these evidences are examined at the assessment stage. The examination of basic evidence at the appellate stage or even at the stage of the DRP is neither appropriate nor desirabl....
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....e and direct the Assessing Officer to modify the disallowance accordingly. As for the small amount of Rs. 1,307, no arguments were advanced in respect of the same. It is treated as abandoned in view of the smallness of the amount. 12. Ground no. 3 is thus allowed in the above terms. 13. In ground no. 4, the assessee has raised the following grievance: 4. Taxing foreign receipts on gross basis 4.1 The learned Addl. CIT/DRP erred in making addition of tax withheld of Rs. 85,22,657 by Konkola Copper Mines PLC in Zambia. 4.2 The learned Addl. CIT/DRP erred in not appreciating that only the net income of Rs. 4,33,07,781 (i.e. after withholding tax) is liable to tax in the hands of the appellant in India. 4.3 Without prejudice to the above, the learned Addl. CIT erred in restricting the credit under section 90 to Rs. 77,74,566 instead of the actual withholding tax of Rs. 85,22,657 that was added to the income 14. So far as this ground of appeal is concerned, only a few material facts need to be taken note of. The assessee had received a net amount of Rs. 4,33,07,781 from Konkolka Copper Mines PLC Zambia, while the total income in respect of the same was Rs. 5,09,50,332 on whic....
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....ars the software expenses are to be regarded as an intangible capital asset, without appreciating the fact that the software payments were for actual usage for a period of less than one year. 5.3 Without prejudice to the above, the learned Addl. CIT erred in allowing depreciation at an incorrect rate of 25%, instead of 60% for computer software allowable as per the Income- tax Rules, 1962. 19. So far as this ground of appeal is concerned, the relevant material facts are as follows. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed a deduction of Rs. 5,82,62,091 as expenditure on the software. The Assessing Officer was of the view that this software was used in certain projects, running for a period of 1-3 years, it should be treated as a capital expenditure. The Assessing Officer extensively quoted from the special bench decision in the case of Amway India Enterprises Vs DCIT [(2008) 11ITD SB 112 (Del)] to justify this conclusion. The assessee did raise an objection before the DRP but without any success. In a very brief order, and based on rather vague and sweeping generalizations, learned DRP confirmed the disallowance. Wh....
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.... year, the same ought to be (a) reduced from the capital gain arising to the assessee in the subsequent year on sale of office building; (b) and/or added to the block of assets of building. 25. So far as this grievance of the assessee is concerned, it is sufficient to take note of the fact that the said amount of Rs. 8,30,000 has been disallowed on the ground that it pertains to sale of a capital asset. The assessee's objection before the DRP did not yield any success either. The assessee is not satisfied and is in appeal before us. 26. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 27. On a perusal of details of expenses, as placed on page 743 of the paperbook, we find that the expenses pertains to legal expenses in connection with structuring of the transaction and related aspects. These expenses were incurred in the course of the business and for its operations, though the specific issue on which advice was sought pertained to the sale transaction. Merely because the transaction in question is a capital asset, the legal expenses will not also become capital expenditur....
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....tive of whether the borrowing went in for a revenue purpose or for a capital purpose, must be necessarily regarded as an item of revenue outgoing. In coming to that conclusion the Supreme Court stated the principle thus : "On the facts of this case, the money secured by the loan was the things for the use of which this expenditure was made. In principle, apart from any statutory provisions, we see no distinction between interest in respect of a loan and an expenditure incurred for obtaining the loan." 7. This decision of the Supreme Court has been followed in innumerable decisions of the Courts since then. As an example may be cited a decision of a Bench of this Court in CIT vs. Kisenchand Chellaram (India) (P) Ltd. (1980) 16 CTR (Mad) 248 : (1981) 130 ITR 385. That case too related to the claim of an assessee-company for the allowance of legal charges representing the fees paid to the Registrar of Companies for increasing the company's capital. The argument addressed before the Court on behalf of the IT Department. in that case was that the legal expenditure contributed to the increase in the capital of the company and, therefore, it could not be allowed as a revenue item.....