TaxTMI 
TaxTMI 
2019 (11) TMI 864
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....2,35,08,815/- for assessment year 2009-10. 4. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing precision parts, namely, dials for wrist watches, wrist hands press tools, etc. For assessment year 2007-08, it filed its return of income on 31.10.2007 declaring an income of Rs. 4,95,75,210/-. Similarly, for assessment year 2008-09, it filed its return of income on 30th September, 2010, declaring the total income of Rs. 1,03,89,260/- and for assessment year 2009-10, the return was filed on 01.10.2009, declaring the total income of Rs. 44,43,150/-. Since the assessee had entered into international transaction with its AE, the Assessing Officer referred the matter to the file of the TPO for determination of the ALP of the international transaction entered into by the assessee. The TPO proposed upward adjustment of Rs. 2,52,45,103/- for assessment year 2007-08, Rs. 2,67,83,126/- for assessment year 2008-09 and Rs. 2,35,08,815/- for assessment year 2009-10. The Assessing Officer accordingly made addition of the same in the assessment order. In appeal, the ld.CIT(A) deleted the TP adjustments made by the assessee for all the three ye....
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.... has not been made for the commission paid to third party as per the agreement entered into between the AE and the appellant. It may be mentioned here that my predecessor for assessment year 2005-06 on similar facts has allowed TNMM as most appropriate method and deleted the addition on account of adjustment made in sales to the AE. Considering the entire facts and circumstances of the case in my view the arm's length price determined by the appellant tor the export sales made to the AE by using TNMM is at arm's length. Accordingly, addition made on account of adjustment made in arm's length for export sales to the AE arc deleted for all the assessment years under consideration. (B) Commission paid to the AE Ld TPO has made the addition on account of treating ALP of commission paid to the AE in respect of unrelated export sales by applying CUP at nil. The basic contention of the Ld TPO is that there is no significant services rendered by its AE to get the commission ranging at the rate between 5-15% as per the agreement entered into between the appellant and its AE. Ld AR main contention against in finding of the TPO are that the appellant have no oversea....
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....to the file of the A.O./TPO to decide the ALP of the commission paid by the assessee after taking into consideration the affidavit of Mr. Ernst Huber, Director, Taratec SA, Switzerland. He, however, submitted that the matter should be decided here and should not be restored to the file of the A.O./TPO. 7. The ld. DR, on the other hand, submitted that since the Tribunal in assessee's own case for the immediately preceding two assessment years has restored the issue to the file of the A.O./TPO for determination of the ALP of the commission paid, he has no objection if the matter is restored to the file of the A.O./TPO. 8. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We find, in the immediately preceding two assessment years, the Tribunal in assessee's own case, vide ITA No. 4284/Del/2010 and 5567/Del/2010, order dated 30th May, 2016, has admitted the additional evidence in the shape of the affidavit of Mr. Ernst Huber, Director, Taratec SA, Switzerland and has restored the issue to the file of the A.O./TPO for determination of the ALP of the commission paid. The relevant observations of the Tribunal at para 20 re....
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....Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT, vide ITA No.747/2014 and the decision of the Hon'ble Delhi High Court in the case of CIT vs. Holcim India Ltd., 272 ITR 277, deleted the addition. It is the submission of the ld. DR that in view of the CBDT Instruction No.05/2014 dated 11th February, 2014, disallowance of expenditure can be made u/s 14A r.w. Rule 8D where the assessee has not earned any exempt income. It is the submission of the ld. counsel for the assessee that in view of the binding decision of the Hon'ble Delhi High Court in the case of Holcim India Ltd. (supra), since the assessee has not received any dividend income during the year, therefore, the order of the CIT(A) on this issue has to be upheld. We find merit in the argument of the ld. counsel. The ld. DR could not controvert the factual finding given by the ld.CIT(A) that the assessee has not received any exempt income during the year. Therefore, in view of the decision of the Hon'ble Delhi High Court in the case of Holcim India Ltd. (supra) where it has been held that no disallowance u/s 14A r.w. Rule 8D can be made when the assessee has not received any exempt income duri....
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.... changing. Therefore, he rejected the claim of the assessee regarding strategic investment for furtherance of business. So far as the argument of the assessee that there is no finding to the effect that there is wrong claim of exemption for generating exempt income in the books of account of the assessee is concerned, he observed that since the investment in shares are not static one, therefore, there is bound to have some administrative and financial expenditure relatable to these investments. He accordingly upheld the action of the Assessing Officer in disallowing the amount of Rs. 5,50,945/- for assessment year 2008-09 and Rs. 11,81,011/- for assessment year 2009-10. 15. The ld. counsel for the assessee, at the outset, submitted that the Assessing Officer, during assessment year 2010-11 has made no disallowance. So far as both the assessment years are concerned, the Assessing Officer has not proved the nexus between any expenditure incurred for earning of the exempt income. Referring to the letter addressed to the Assessing Officer on 25th December, 2011 for assessment year 2008-09, copy of which is placed at page 125 of the paper book, he submitted that it was categorically ....
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....see has not incurred any administrative expenditure. We find some force in the argument of the ld. DR on this issue. It cannot be said that there is no satisfaction of the Assessing Officer in the instant case. He had categorically asked the assessee and the assessee has computed such disallowance as per the provisions of section 14A r.w. Rule 8D of the Act. We, therefore, do not find any infirmity in the order of the Assessing Officer in making a disallowance of Rs. 5,50,945/-. The ld.CIT(A) has rightly disallowed the same. We, therefore, uphold the action of the CIT(A) in sustaining the addition of Rs. 5,50,945/-. 18. So far as assessment year 2009-10 is concerned, it is seen from the computation statement filed at page 96 of the paper book that the actual dividend received by the assessee during the year is Rs. 4,21,566/- only. It has been held in various decisions that the disallowance u/s 14A r.w. Rule 8D cannot exceed the actual exempt income received. We, therefore, modify the order of the CIT(A) and direct the Assessing Officer to restrict the disallowance u/s 14A r.w. Rule 8D to the actual dividend income received during the year. The ground raised by the assessee fo....