TaxTMI 
TaxTMI 
2018 (2) TMI 975
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....ntered into by assessee with its AE. The TPO vide order dated 29.01.2015 made adjustment of Rs. 14,54,45,173/- in respect of Royalty payment to its AE, Dana Corp., USA. The TPO held that the assessee has failed to show any advantage from the services rendered by Dana Corp., USA, therefore, payment of royalty is not justified and took the ALP of royalty payment as 'Nil'. The Assessing Officer in line with the order of TPO passed draft assessment order on 30.03.2015. Further, the Assessing Officer made addition of Rs. 2,25,00,000/- on account of warranty provision and disallowed management services fees of Rs. 14,54,45,173/- paid to Asia Investment Pvt. Ltd., a group concern of the assessee. The Assessing Officer held that services rendered by the Asia Investment Pvt. Ltd. are general in nature. The assessee has not been able to substantiate the reason for making such huge payment. The assessee has also not been able to show through cogent evidence, services rendered by Asia Investment Pvt. Ltd. 3. Aggrieved by the additions made by Assessing Officer and TPO, the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP vide directions dated 30.12.2015 deleted t....
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....ed in Sport Utility Vehicles (SUVs) and Light Commercial Vehicles (LCVs) manufactured by Original Equipment Manufacturers (OEMs). The sale order of the customers invariably has a clause regarding warranty and sales invoice price includes warranty as part of cost of goods sold. The assessee employs mercantile method of accounting and provides for warranty liability at 0.3% of sales based on scientific analysis of past data and represents a reliable estimate of liability arising out of sales made during the relevant previous year. The ld. AR asserted that assessee qualifies the test laid down by Hon'ble Supreme Court of India in the case of Rotork Controls India P. Ltd Vs. CIT reported as 314 ITR 62. The DRP has granted relief to the assessee by following the law laid down in the case of Rotork Controls India P. Ltd (supra). 5. On the other hand, Shri Rajeev Kumar representing the Department vehemently supported the findings of TPO in making adjustment in respect of Royalty payment to Dana Corp., USA. However, the ld. DR fairly admitted that issue relating to payment of Royalty and payment of management services fees has been considered by Tribunal in assessee's own case in as....
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....usiness Development, Marketing and Distribution: Services like conducting presentations on latest technologies at client location, meeting with key customers to generate opportunities for SIPL, supporting in participation at various business events etc. This support from AIPL resulted in increased turnover year on year as well as boost in aftermarket sales as provided vide submission dated 26 March 2013 before the learned AO. * Finance: AIPL's strong corporate relationship with leading lending institutions, commercial banks, insurance companies supported SIPL in arranging and availing long term funds and short term working capital needs at competitive rates, covering foreign exchange exposure risk, negotiating quotes for Insurance as well as reviewing and advising for risk coverage etc. * Legal and taxation: In accordance with frequent changes in various Acts and Rules in Direct and Indirect Tax Laws and various other laws, AIPL supported in advising from time to time with regard to changes which helped SIPL to comply with all the laws and regulations. * Operational overview: AIPL conducted periodic operation review meetings to drive the performance o....
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.... be provided and the fees to be charged for providing the said services. The majority of support services are being rendered by the said concern to the assessee and the perusal of expenses debited by the assessee reflects that no major expenses have been incurred by the assessee and the benefits flow from AIPL to the assessee. The said benefits were for smooth carrying on of the business by the assessee and were incurred for the purpose of business. The assessee is the best judge to decide the expenditure it needs to incur for smooth carrying on of its business. The Assessing Officer cannot sit in judgment of businessman position in incurring any expenditure. The Hon'ble Supreme Court in Hero Cycles (P) Ltd. Vs. CIT (supra) have applied the ratio laid down by the Apex court in S.A. Builders Ltd. Vs. CIT(A) and another (2007) 288 ITR 1 (SC) and upheld the scope of commercial expediency, wherein it was held that The expression "commercial expediency" is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as business expendi....
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....1 to 210 of the Paper Book. It was pointed out that associate enterprises supports the assessee in technology upgradation by bringing the latest technology in drive train systems to India. The Assessing Officer referred the issue of computation of arm's length price of the said international transaction to the TPO, who in his order treated the arm's length price at Nil. 49. In the facts and circumstances of the present case, the Royalty paid by the assessee to its associate enterprises had been approved by the Secretariat of Industrial Approval, Ministry of Industry, Government of India, vide letter dated 28/31.01.2003 and initially by the RBI @ 3%. However, subsequently, the RBI vide communication dated 21.07.2003 accorded automatic approval route to make the Royalty payment at 8% on exports and 5% on domestic sales without any restriction on the duration of Royalty payments. Thereafter, this rate was reduced to 2.85% by the RBI. The case of the assessee before the TPO was that since the Royalty payments were in terms of approval granted by SIA and RBI, the same were at arm's length price and the assessee placed reliance on CUP method for benchmarking the said....