TaxTMI 
TaxTMI 
2017 (1) TMI 1617
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....amount of Rs. 25,52,557/- by treating the same as professional fee invoking the provisions of Section 40(a)(i) of the Act. (ii) That the above said addition has been made rejecting the contention of the assessee that the cost contribution arrangement does not fall within the definition of fee for technical services. 3(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming addition made by the AO of an amount of Rs. 12,00,000I- on account of rate difference. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in holding that the amount of Rs. 12,00,000I- is not an ascertained liability ignoring the details of the supplier's invoices in respect of the same submitted by the appellant. 4(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not adjudicating the contention of the assessee that TPO has erred in taking operating profit/operating cost as the PLI as against PBID/sales taken by the appellant. (ii) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in not adjudi....
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....fting such incentives offered by the Government to an Indian company from one tax jurisdiction to another tax jurisdiction which is clearly against the Transfer Pricing provisions under the Indian Income-tax law. 4. For these and such other grounds as may be urged at the time of the hearing, the order of the learned Commissioner of Income-tax(Appeals) may be vacated and that of the Assessing officer be restored. 5. First, we shall take up the appeal filed by the Revenue, wherein the solitary issue raised is against computation of operating margins of assessee and comparable companies by including export incentives as operating income. 6. Briefly, in the facts of the case, the assessee for the year under consideration had filed its return of income declaring loss of Rs. 3.38 crores. The case of the assessee was taken up for scrutiny. The assessee had entered into international transactions with its associate enterprises at Rs. 58,26,19,745/-, hence, reference under section 92CA(1) of the Act was made for computation of arm's length price in relation to the international transactions. The Transfer Pricing Officer (in short 'the TPO') did not accept the benchmarking of interna....
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....ssessee on the other hand, pointed out that under the TP provisions, the operating income has wider connotation. He referred to the Safe Harbour Rules, which defines the operating income i.e. operating income means in the course of business. Reliance was placed on the ratio laid down by Mumbai Bench of Tribunal in Welspun Zucchi Textiles Ltd. Vs. ACIT in ITA No.6539/Mum/2009 and DCIT Vs. Welspun Zucchi Textiles Ltd. in ITA No.898/Mum/2010, relating to assessment year 2005 -06, order dated 11.01.2013, wherein it was held that operating income would include exports benefits. The learned Authorized Representative for the assessee referred to the decision of Hon'ble Supreme Court in CIT Vs. Sterling Foods (supra) and pointed out that for computing the profits and gains eligible for the benefit under section 80HH of the Act, the term used is 'derived from' which means direct nexus between profits and gains and industrial undertaking. However, the definition of operating income was much wider. The learned Authorized Representative for the assessee further pointed out that in case the appeal of Revenue is dismissed, then the grounds of appeal raised by the assessee against the TP adjustme....
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....ty. The Assessing Officer on the other hand, held it to be professional fees and eligible for tax deduction at source and because of non-deduction, the said amount was disallowed under section 40(a)(i) of the Act. The learned Authorized Representative for the assessee points out that before the CIT(A), the first plea was that there was no requirement to deduct tax at source and an alternate plea was raised which has been not considered that the assessee has deducted tax at source and deposited the same in the Government account and in some cases, the same was within time and in some cases, the same was after the due dates. There were few bills which were reimbursement of expenses and hence, not eligible for deduction of tax at source. Our attention was drawn to the submissions made before the CIT(A) at page 510 of Paper Book with special reference to page 532 of the Paper Book and the summary of payments disallowed under section 40(a)(i) of the Act due to non-deduction of tax under section 194 of the Act, which is placed at page 414 of the Paper Book. 16. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of CIT(A). 17. We have....
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....Officer rejected the claim of assessee holding that the same was not an ascertained liability and addition of Rs. 12 lakhs was made. 20. Before the CIT(A), the assessee filed complete details of invoices i.e. liability accrued on account of revision of rate by the parties which are tabled at pages 11 and 12 of the appellate order. The CIT(A) noted that some of the invoices were before close of the year and the others were after close of the year. The CIT(A) was of the view that the assessee could have straight away claimed the deduction on account of accrued expenditure, which was not done and as far as other invoices were concerned, the CIT(A) held that the assessee had not furnished any evidence for arriving at particular quantum of provisions. In view thereof, the CIT(A) held that the said amount could not be considered as an ascertained liability and the same may be contingent liability and the order of Assessing Officer was confirmed. 21. The assessee is in appeal against the order of CIT(A). 22. The learned Authorized Representative for the assessee before us has filed the list of invoices raised for price increase in February and March, 2008. Some of the invoices were rai....