AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 936
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.... and exclusively for the purposes of its business. 2. On the facts and the circumstances of the case and in law , the Ld. CIT(A) erred in deleting the disallowance of freight & forwarding charges of Rs. 3,35,04,706/- without appreciating that the assessee in the course of the assessment proceedings did not submit the complete details of the freight & forwarding charges to justify and establish that the entire expenditure was laid out or expended wholly and exclusively for the purposes of its business. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of miscellaneous expenditure of Rs. 3,81,11,1741- without appreciating that the assesseee in the course of assessment proceedings did not submit the complete details of the miscellaneous expenditure to justify and establish that the entire expenditure was laid out or expended wholly and exclusively for the purposes of its business. 4 (i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment of Rs. 1,21,81,647/- made by the Transfer Pricing Officer and Assessing Officer towards the royalty payment by holding tha....
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....r the same alongwith supporting documents. As a consequence, the Assessing Officer disallowed 50% of the expenditure debited in the P&L Account under each of the aforesaid heads and accordingly the disallowance worked out under various heads was as under:- Travelling and conveyance - Rs. 1,12,39,325/- Freight and forwarding charges - Rs. 3,35,04,706/- Miscellaneous Expenses - Rs. 3,81,11,174/- The assessee company carried the matter in appeal before the CIT(A). The CIT(A) has deleted the entire additions primarily on the ground that similar additions made in assessment year 2003-04 were deleted by him. The CIT(A) has also noted that assessee was directed to produce the sample copies of certain supporting evidences, which were examined by him. Against such action of the CIT(A), Revenue is in appeal before us. 5. Before us, it a was a common point between the parties that the order of the CIT(A) for 2003-04 was examined by the Tribunal vide ITA No.630/Mum/2011 dated 20/01/2014 and the issue were restored back to the file of the Assessing Officer with directions to readjudicate the claim of the assessee as per provisions of law. Following the said precedent and cons....
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....ed out that for assessment year 2003-04 the Tribunal vide order dated 20/01/2004(supra) had affirmed the action of the CIT(A) in deleting the addition. So however, Ld. Representative for the assessee pointed out that the Tribunal had upheld the ultimate conclusion of the CIT(A) to delete the addition on an alternate plea and that it would be in the fitness of things that the matter in the present year be decided independently inasmuch as on other aspects also the impugned decision of the CIT(A) is unimpeachable. 7.1 In order to appreciate the aforesaid, the following discussion is relevant. The royalty paid by the assessee to its associated enterprise i.e. Dow Netherlands has been approved by the Secretariat of Industrial Approval (SIA), Ministry of Industry(Government of India) vide communication dated 07/09/1996 and also by the Reserve Bank of India dated 11/03/1997. Before us, a reference has also been made to Paper Book, wherein the aforesaid communications have been placed as also a communication SIA dated 22/1/1997, which is in continuation to its earlier approval dated 17/09/1996. In terms of such approvals, assessee is permitted to pay its foreign collaborator i.e. Dow Net....
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....rolled transaction was concerned, the CIT(A) in assessment year 2002-03 has accepted the plea of the assessee. However, with regard to the plea of the assessee based on the rate of royalty approved by the Central Government is concerned, the CIT(A) rejected the same as according to him, such rates could not be considered as valid CUP data. The CIT(A) had however, allowed relief by benchmarking royalty payment under the TNMM whereby, the margins from the manufacturing activities of the assessee were found to be favourable vis-à-vis those of the comparables concerns. The Tribunal in assessment year 2003-04 upheld the ultimate conclusion of the CIT(A) to delete the addition on the ground that the basis on which the royalty was paid by the Dow UK to Dow Netherlands was different than that was paid by assessee to Dow Netherlands in as much as Dow UK was paying royalty as a percentage of gross sales, whereas assessee was paying royalty at net sales, in accordance with Foreign Exchange Control Regulations. The Tribunal found that if the royalty payable was calculated by adopting the same basis, then the royalty being paid by Dow UK was higher than what has been paid by assessee com....