TaxTMI 
TaxTMI 
2016 (8) TMI 1417
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....he I.T. Act,1961 dated 14/10/2011. On an application filed by the Assessee U/s 154 of the Act pointing out certain arithmetical inaccuracies the transfer pricing order rectified on dated 13/12/2011 and consequently the assessment order U/s 143(3) was also rectified U/s 154 on dated 20/06/2013. 3. Two Cross Appeals pertaining to assessment year 2009-10 , are directed against an order passed by the Ld. CIT (A)-55 Mumbai, Vide order No.CIT (A)-55/IT-143/13-14 dated 31/03/2015, which in turn arises out of an order passed by Dy. Commissioner of Income Tax 8 (1), Mumbai, under section 143 (3) r.w.s.144C(3) (a) of the Income Tax Act, 1961 ( in short, `the Act‟ ) dated 28/05/2013 and vide TPO order U/s 92CA (3) of the I.T. Act,1961, ( in short „the Act‟) dated 28/01/2013. 4. Briefly put, the relevant facts are that the assessee is a company and is inter-alia engaged in the business of providing information Technology enabled services, such as, call centre and BPO services etc. During the assessment proceedings, certain additions and disallowances were made including transfer pricing adjustments on account of certain transactions with its Associated Enterprises ("AE"....
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....t LIBOR + 2%. Since no independent CUP rate is available for the transaction, the CIT(A) relied on RBI guidelines and used External Commercial Borrowings rates and determined the ALP at LIBOR+2%, and accordingly the adjustment amount reduced to Rs. 51,32,859/- as against Rs. 3,42,77,125/- made by AO/TPO in A.Y 2008-09. Aggrieved, from the order of the Ld. CIT (A), the Revenue as well as the Assessee are in further appeals before us on this particular issue for A.Y 2008-09 and A.Y. 2009-10. Since the assessee and Revenue both are in further appeals on the same identical issue and facts before us, therefore we are not going to repeat the issue and facts for A.Y. 2009-10 for the sake of brevity. 11. The ld. Departmental Representative for the Revenue has primarily reiterated the stand of the Assessing Officer/TPO which we have already noted in earlier para and is not being repeated for the sake of brevity. 12. On the other hand the Ld. AR for the assessee submitted that internal CUP should be preferred over external CUP, as it has benchmarked the transactions by using Internal CUPs of LIBOR +0.65% ,(JPY LIBOR + 1% +0.2% upfront fees). The Internal CUPs have been determined based....
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....f the Ld. CIT (A), the assessee company as well as Revenue are in further appeals before us. 16. We have carefully considered the rival submissions and gone through the facts and circumstances of the case. The Ld. Departmental Representative for the Revenue has primarily reiterated the stand of the Assessing Officer and CIT (A). On the other hand, the Ld. AR for the assessee company stated that the same identical issue is covered by the Hon`ble Mumbai Tribunal`s order in ITA No.7033/Mum/2012, in assessee`s own case for A.Y. 2007-08 dated 25/03/2015. The Hon`ble Mumbai Tribunal in para 2.6 of the said order held that guarantee commission at the rate of 0.5% from its Associate Enterprise can be said to be at arms length. Thus, respectfully following the decision of Tribunal in assessee company`s own case, whereby issue were decided in favour of the assessee company. Accordingly, we direct the AO/TPO to compute and charge the guarantee commission at the rate of 0.5% from its Associate Enterprise. 17. In the result, the ground No. 1 of Assessee`s appeal in ITA No. 620/M/13 for A.Y. 2008-09, and grounds Nos: 1,2 and 3 of Assessee`s Appeal No. 4276/M/2015 for A.Y. 2009-10 are allow....
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....application money can not be treated as loan amount merely because there is a delay in issuance of shares by the subsidiary in the name of the assessee. 22. Thus, respectfully following the decision of Tribunal in assessee company`s own case, whereby issue were decided in favour of the assessee company. Accordingly, we direct the AO/TPO to delete the addition made on this ground. 23. In the result, Ground No.3 of Assessee`s appeal in ITA No. 620/M/13 for A.Y. 2008-09 is allowed and Ground No. 3 of Revenue`s appeal No. 4790/M/2015 for A.Y. 2009-10 is dismissed. 24. Ground No.4 of Assessee`s appeal in ITA No. 620/M/13 for A.Y. 2008-09 and Ground No. 5 of Assessee`s Appeal No. 4276/M/2015 for A.Y 2009-10: Issue involved is: Disallowance of deduction claimed under section 35D of Rs. 4,65,200/-The said grounds for A.Y.2008-09 and A.Y. 2009-10 are not pressed by the assessee. 25. Ground No.5 of Assessee`s appeal in ITA No. 620/M/13 for A.Y. 2008-09 and grounds Nos. 4(a) & 4(b) of Revenue`s Appeal No.4790/M/2015 for A.Y 2009-10 : Issue involved is: Addition in respect of interest and finance expenses related to acquisition of shares of foreign subsidiary and disallowance of th....
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....European countries. It had the option to either set up of branch in those countries or form new companies in those countries or acquire some operative company having business activities and presence in those countries. In order to attain the ultimate object of expanding operation in different geographies the assessee decided to acquire Minacs Worldwide Inc, Canada ( Minacs Canada), existing operative company which was in similar line of business as that of the assessee i.e. BPO and Call centre activities. Due to regulatory restrictions in Canada and also for having ease of business, the assessee decided to set up a Special Purpose Vehicle ( Investment SPV) in Canada which in turn will acquire shares on Minacs Canada from its existing shareholders. 30. The interest bearing funds have been utilized for making investment in SPV, AVTL Canada which has acquired Minacs Canada, on account of which there has been significant rise in the business of the assessee. Further, the same has enabled the assesssee to enhance its presence in the world market for its BPO business. Accordingly, the interest expenditure incurred by the assessee is out of commercial exigency of the business and hence....
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....penditure. 34. The assessee company had incurred expenditure of Rs. 34,31,823/- towards the foreign travel of its employees for expansion of its business acquired in Canada. The said expenditure were incurred by the assessee in relation to acquisition of its subsidiary Minacs Canada. The Assessing officer disallowed the said expenditure holding that these expenditure are in relation to the investment activity in Canada and the same has not been incurred by the assessee for the purpose of the business. Besides, the Assessing officer treated these expenses as capital expenses and disallowed the same. Aggrieved from the order of the Assessing Officer, the assessee filed an appeal before the Ld CIT (A) -15, Mumbai, who has also confirmed the action of the Assessing Officer. Not being satisfied with the order of the Ld. CIT (A), the assessee is in further appeal before us on this ground. 35. We have carefully considered the rival submissions and gone through the facts and circumstances of the case. The Ld. Departmental Representative for the Revenue has primarily reiterated the stand of the Assessing Officer and CIT (A). On the other hand, the Ld. AR for the assessee company state....