TaxTMI 
TaxTMI 
2018 (10) TMI 1116
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.... 3. We have heard the rival contentions and have given thoughtful consideration to the orders of the authorities below. 4. Briefly stated, the facts of the case are that the appellant-company was formerly known as One Stop Airline MRO Support Private Limited. It was incorporated under the Companies Act, 1956 on 27.07.2005. It is a subsidiary of Lufthansa Technik Immobilien - und Verwaltungsgesellschaft mBh, Germany which, in turn, is a subsidiary of Lufthansa Technik Aktiengesellschaft (LHT). 2. During the year under consideration, the appellant company was primarily engaged in the provision of services as well as provision of aircraft components in India. In relation to these activities, the appellant entered into a number of international transactions with its Associated Enterprise (AE) which are as under: S. No. Nature of transaction Method used by Appellant Value of transaction (INR) 1. Provision of marketing support services Transactional Net Margin Method 3,70,49,263 2. Provision of logistics support services TNMM 1,73,38,799 3. Interest on external commercial borrowings Comparable Uncontrolled Price ....
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....LI of the comparables was 24.30%, transactions were claimed to be at arms length. 8. The TPO found from the home base segmental account that the assessee had not allocated expenses properly to this segment. The TPO was of the opinion that most of the expenses had been allocated to the other domestic operation segment. The TPO observed that it is against the common business expediency that the revenue of Rs. 12.27 crores in the other segment is consuming Rs. 15.23 crores of expenses while home base segment is consuming only Rs. 9.23 crores of expenses. The TPO further observed that no salary, communication, telephone, travelling, conveyance and other administrative expenses have been incurred for the leasing business. The TPO formed a belief that homebase segment was artificially showing higher operating margin of 49%, while the domestic operation was showing loss of 24.13%. The TPO proceeded by pooling together homebase and domestic operation and the same read as under: Operating Income Homebase Domestic Total 18,09,81,838 12,27,21,421 30,37,03,259 Operating Expenses 9,23,06,510 15,23,39,180 24,46,45,690 Operating Expenses(re- allo....
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....,09,81,838 Operating 14,57,88,44 10,86,25,29 Operating 3,51,93,390 7,23,56,539 OP/OI 19.45% 39.98% Shortfall = 145788448-108625299 = 3,71,63,149 14. The above shortfall of Rs. 3,71,63,149/- is computed as an adjustment to the depreciation claimed by the taxpayer in its Homebase segment. It is further noted that the assessee is claiming depreciation on leased assets @4.75 % (as per Companies Act). Therefore, the reduction in depreciation of Rs. 3,71,63,149/- corresponds to a reduction in the price of asset amounting to Rs. 78,23,82,084 (Rs. 3,71,63,149/.0475). Therefore, the ALP of value of assets is calculated as below: Book Value of the asset as per Form 3CEB A 98,35,34,236 Reduction in price as calculated above B 78,23,82,084 Arm's length Price of Assets A-B 20,11,52,152 15. Therefore, the arm's length price of the assets imported by the assessee comes to Rs. 20,11,52,152/-. The Assessing Officer shall reduce the value of block of fixed assets containing the leased assets of the assessee by an amount of Rs. 78,23,82,084/- while allowing the depreciation [as per Income Tax Act) on this....
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....ring a total income of Rs. 15,423. The assessee had received deposits from six parties on April 14, 25, 1984, and had repaid all of them in the years 1984 and 1985. The Assessing Officer, disregarding the evidence produced by the assessee in respect of the identity and genuineness of the parties and their financial capacity, made an addition of the amount of the said six deposits totalling Rs. 2,80,000. An appeal was preferred by the assessee before the Commissioner of Income-tax (Appeals) who accepted the assessee's contentions regarding the genuineness of these transactions and deleted the addition of the said amount of six deposits. In the appeal preferred by the Revenue, the Tribunal held that in the case of cash credit entries, the assessee has to prove the identity of the capacity of the creditor to advance the loan and genuineness of the transaction. The Tribunal held that the Assessing Officer, for reasons best known to him, did not care to examine the five creditors and did not take note of the voluminous evidence which was adduced by the assessee. It was found that the Assessing Officer had adopted a short-cut method and placed reliance on the statements of t....
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....earch and analysis of potential customers; b) Advise on current market pricing (benchmark) and developments in the market; c) Performance of customer liaison in general and communication of customer complaints; d) Performance of networking I promotion activities with key contacts for better relationships between LHT and customers; e) Monitoring of prices, supply and demand on a country basis; f) Channelling sales enquiries to LHT, and g) Dissemination of information about LHT's products / services. 23. As per the consultancy agreement, for running the above mentioned services, the appellant charged its AE the costs incurred in rendering such services plus, a mark-up of 9 percent on such costs. A perusal of the aforementioned services shows that these services are in the nature of routine support services and the appellant does not employ highly qualified or technical staff for the same, and uses routine assets like furniture, office equipment etc. for rendering the MSS. 24. The segment of MSS has been benchmarked by the appellant using TNMM as the most appropriate method and Operating Profit / Total cost as the Profit Leve....
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....Technicom-Chemie (India) Ltd. Prowess 1.97 94.42 0 13.43 16 Vapi Waste & Effluent Mgmt. Co Ltd Prowess 19.9 79.85 0 47.53 17 WAPCOS Ltd. (Seg) Capitaline 160.05 .97.56 0 58.98 29. Before us, the inclusion of the following companies was challenged and only these companies will be considered by us: a. APITCO Limited b. Best Mulyankan Consultants Ltd c. Choksi Laboratories d. RITES Limited e. WAPCOS Limited APITCO Limited 30. A perusal of the annual report of this company shows that it carried out functions related to MSS, for which it prepares project feasibility reports, carries out market / other surveys, arranges for seminars and trainings, provides "escort services", energy related services, skill development etc. In our considered opinion, looking to the business profile of the assessee under MSS segment, as mentioned elsewhere, this company is functionally different from the appellant company and, therefore, cannot be accepted in the final list of comparables. We, accordingly, direct the Assessing Officer /TPO to exclude this company. B....