TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 479
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....acts and in the circumstances of the case and law, Ld. CIT(A) was correct in restoring back o the TPO the transfer pricing adjustment made of Rs. 10652699/- on account of marketing and support services for deciding the issue afresh, ignoring the fact the TPO in his order u/s 92CA(3) dated 28.03.2005 had made an adjustment of Rs. 135589560/- on account of expatriate salary' not debited to P&L account but claimed in the return of income and Rs. 10652699/- on account of ECB transaction. 4. The appellant craves to add, amend, modify, or alter any grounds of appeal at the time or before the hearing of the appeal." 2. The facts in brief of the case as culled out from the order of the lower authorities are that during the year under consideration Bank of Tokyo Mitsubishi Ltd. Japan (BOTM- group) operated in India through its branches at New Delhi, Mumbai, Kolkata and Chennai, which constituted the permanent establishment (PE) of BOTM group in India as per article 5 of India- Japan Double Taxation Avoidance Agreement (DTAA). This permanent establishment is the assessee in the case. The assessee i.e. BOTM-India, was engaged in wholesale banking operation, catering mainly to Japan-ba....
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....hich is not expired, is not income accrued during the year and same was treated as advance in accordance with the accounting policy followed by the assessee Bank. According to the Assessing Officer, the Commission received was like a fee for issuing guarantee and was not a contingent receipt or advance and which accrued at the time of bank issues the guarantee. According to the Assessing Officer, the income gets accrued to the assessee; the moment right to receive has arisen. Accordingly, he added the sum of Rs. 1,75,34,052/- to the income of the assessee. 3.2 The Ld. CIT-(A), following the order of the Hon'ble Calcutta High Court in the case of the assessee for assessment year 1981-82, adjudicated the issue in the favour of the assessee. 3.3 Before us, the Ld. CIT(DR) supported the order of the Assessing Officer and submitted that guarantee commission accrued to the assessee, the moment it issued guarantee and thus the entire guarantee commission was liable to be assessed in the year under consideration. Without prejudice to above, he also submitted that from the facts of the case it was not clear whether the assessee declared any income for guarantee commission in respect of th....
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....2007-08. The findings of the Hon'ble Delhi High Court are reproduced as under: "Deferred bank guarantee commission 16. This issue appears to be covered in favour of the Assessee by the decision of the Calcutta High Court in CIT Vs. Bank of Tokyo Ltd. (1993) 71 Taxman 85 (Cal). 17. Accordingly, this Court declines to frame any question on this issue." 4.7 On perusal of page 11 & 12 the statement of facts filed before the Ld. CIT-(A), it is evident that assessee has followed consistent method of accounting of crediting income over the period of life of the bank guarantee, following the decision of the Hon'ble Calcutta High Court (supra) in its own case for assessment year 1981-82. The Ld. CIT-(A) has allowed relief to the assessee following the above decision of the Hon'ble Calcutta High Court. In view of above, we do not find any error in the finding of the Ld. CIT-(A) on the issue in dispute, accordingly, we uphold the same and the ground No. 1 of the appeal is dismissed. 5. The ground No. 2 relates to disallowance of Rs. 2,76,749/- on account of freight and forwarding & clearing charges in respect of Japanese food stuffs imported for the expat employees. The assessee submit....
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....ent for the officers who are coming fronm Japan and who could not afford to take any kind of food other than those which they are used to and which are available only in Japan which have got to be imported for maintaining the health of the officers of the company. As prudent business organization, the assessee found it expedient to pay for the freight and clearing charges on import of food stuff for employees. The AO, however, did not find it incidental to the running of the business and disallowed the same. The CIT(A) also did not find any justification in the expenditure incurred by the assessee while confirming the disallowance. 19. After considering the rival submissions in this Regard, we find that the assessee-company, as a business organization, had to be careful about the health of its officers for the interest of the business and, therefore, we do not find anything wrong in the assesseecompany paying for the freight and clearing charges of the import of food exclusively for the officials of the company who, otherwise, could not have performed to the level it was desired of them. We consider this to be genuine business expenditure and in reversing the order of the author....
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....tstanding loans, is considered as the appropriate consideration at arm's length for the services provided by the bank to the foreign branches. The compensation is computed as below: S. No. Name of Customer Amount of ECB Loan Interest @0,5% per annum Exchange Rate as on 31-3-02 Amount at Arm's Length 1 Maruti Udyoq US$30 Million US$150000 48.80 7,320,000 2 Asahi India Glass JPY 163.7 Million JPY 818500 0.36807 301,265 3 Asahi India Glass JPY 328 Million JPY 1640000 0.36807 603,634 4 Air India Ltd US$7.5 Million US$37500 48.80 1,830,000 5 Chemtex Enqq Ltd US$2.45 Million US$12250 48.80 597,800 10,652,699 Therefore, the compensation at arm's length for the services rendered with regard to continued ECB transactions, works out to Rs. 10,652,699/. The spread (net interest margin) of 200 basis points is adopted in this order in absence of information submitted by the assessee. This amount of Rs. 10,652,699/- is required to be added to the income of the assessee." 6.2 the Ld. CIT-A observed that the TPO violated the principle of natural Justice and used the data, which was not available in the publ....