TaxTMI 
TaxTMI 
2020 (12) TMI 723
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....into International Transactions during the year under consideration which required the determination of Arm's Length Price (ALP). He accordingly made reference to TPO u/s 92CA(3) of the Act. The TPO vide order dated 14.10.2008 passed u/s 92CA(3) worked out the value of international transaction at Rs. 13,59,65,489/- and accordingly directed the AO to enhance the income of the assessee to that extent. The AO, thereafter in the order dated 19.12.2008 passed u/s 143(3), apart from making other additions, also made addition on account of understatement of ALP as suggested by TPO and determined the total income of Rs. 26,57,28,850/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 28.02.2011 in Appeal No.79/09-10 CIT(A)-XX allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised following grounds: 1. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 13,59,65,489/- on account of Arm's Length Price. 2. On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 63,03,85....
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....n fact, considered and rejected the additional grounds on merits. The appeal is still pending consideration before the Tribunal. In these circumstances, we are not inclined to interfere with the impugned order at this stage. In case the Revenue is aggrieved by the final order that the ITAT may pass in the pending appeal before the Tribunal, it shall be open to the appellant to raise challenge to the order dated 26.07.2018 as well. All pleas and contentions of the appellant, as raised in the present appeal, are preserved. The appeal stands disposed of in the aforesaid terms. The Tribunal is requested to expedite the hearing of the pending appeal." 7. We thus proceed to dispose of the appeal of the Revenue. 8. Ground No.1 and the additional ground raised by the Revenue are considered together. It is with respect to deleting the addition of Rs. 13,59,65,489/- on account of Arm's Length Price (ALP. 9. TPO noted that Assessee had paid royalty of Rs. 13,59,65,489 to Expeditors International of Washington Inc. It was stated by the assessee that it was in the nature of technical knowhow from its associated enterprise and has helped the assessee in generating good business and tur....
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....lit for the logistics services with multiple group companies. I have been through all the submissions made by the Appellant as well as the TP Order in detail. The TPO has not provided any analysis or evidence in support of his finding that no material benefit has been received by the Appellant. The TPO has not analyzed the operations and the financials of the Appellant to substantiate his conclusion that the Appellant's business can be managed and operated in exclusion of the various technical, operating and strategic services extended by the US Parent or to show that this expense was not in the nature of expenditure entitled to be treated as business expenditure. The TPO has not disputed the business model of the Appellant. The TPO has also not controverted that this same arrangement was being followed by the Appellant since FY 2001, under a specific approval from RBI. The TPO has also not discussed that the same arrangement, under the same business model, had been found to be on an arm s length basis for last year by the TPO. Further, the TPO has not provided any evidence to support his following reasoning: "I have not come across any company which was paying royalty ....
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.... Revenue is now before us. 12. Revenue is aggrieved by the deletion of addition made by the AO and in the additional ground the grievance of the Revenue is that the Transfer Pricing documentation and other additional evidences filed before the CIT(A) by assessee were never referred to AO/ TPO which is a violation of provision of Rule 46A of the I.T. Rules, 1962. 13. Before us, Learned DR submitted that CIT(A) while deciding the issue has considered the supplementary TNMM analysis submitted by the Assessee to him and that CIT(A) decided the issue in favour of the Assessee by relying on the supplementary TNMM analysis submitted by the Assessee. He further submitted that the aforesaid supplementary analysis was in the nature of additional evidence and as per the provisions of Rule 46A of the I.T. Rules, the CIT(A) should have confronted the same to the AO/TPO. He further submitted that supplementary TNMM was analysis by the assessee at the behest of CIT(A) to check the impact of royalty payment on assessee's profit margin vis-à-vis that of independent comparable companies. He submitted that not giving a chance to AO/TPO to confront with the material placed before CIT(A) as an....
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.... made by TPO to hold that the arm's length price for royalty transaction stands subsumed by the gross profit split on revenue received from logistics services on a predetermined basis. She has further given a finding that TPO has not providing any analysis or evidence to support his findings that no material benefit has been received by the assessee and no evidence has been brought on record to demonstrate that assessee's business could be managed and operated by exclusion of various technical, operating and strategic services extended by the AE to the assessee. She has further noted that assessee was following the same business model, the royalty paid since 2001 has been found to be on an arm's length basis and no adjustments were made in the past by TPO. It is a fact that CIT(A) has also considered the supplementary TNMM analysis to check the impact of royalty payment on assessee's profit margin that of independent comparable companies to come to a conclusion that the ratio of operating profit to cost at sales of the assessee is comparable to that of uncontrolled entities but we are of the view that her decision to grant relief is not based solely on the aforesaid supplementary a....
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....& 2003-04 had deleted the addition. Aggrieved by the order of CIT(A), Revenue is now before us. 21. Before us, Learned DR supported the order of AO. 22. Learned AR on the other hand reiterated the submissions made before the lower authorities and further submitted that identical issue arose in assessee's own case in A.Y. 2001-02 & 2003-04 and in those years, the Co-ordinate Bench of Tribunal had decided the issue in favour of the assessee. He further submitted that aggrieved by the order of Tribunal, Revenue carried the matter before the Hon'ble Delhi High Court and the Hon'ble High Court in ITA No.475/2009 for A.Y. 2001-02 and ITA No.1088/2011 for A.Y. 2004-05 has upheld the order of Tribunal. He therefore submitted that CIT(A) has rightly deleted the addition. He thus supported the order of CIT(A). 23. We have heard the rival submissions and perused all the relevant materials available on record. The issue in the present ground is with respect to disallowance of GAM expenses by invoking the provision of Section 40(a) of the Act. We find that CIT(A) while deciding the issue in assessee's favour has given a finding that the payments made by the assessee as GAM charges cannot be ....
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....05 has been upheld by Hon'ble Delhi High Court. He thus supported the order of CIT(A). 28. We have heard the rival submissions and perused all the materials available on record. The issue in the present ground is with respect to the disallowance of VSAT expenses by invoking the provision of section 40(a) of the Act. We find that identical issue arose in assessee's own case in A.Y. 2001-02 & 2004-05 wherein the issue was decided in favour of the assessee by the Co-ordinate Bench of Tribunal. We further find that the order of Tribunal in favour of the assessee was upheld by the Hon'ble Delhi High Court. Before us, no distinguishing feature in the facts of the case and that of A.Y. 2001-02 & 2004-05 has been pointed out by the Revenue. Further no fallacy in the findings of CIT(A) has been pointed before us by the Revenue. Revenue has also not placed any material on record to demonstrate that the order of the Tribunal in assessee's own case in earlier years has been set aside/overruled or stayed by higher judicial forum. In such a situation, we find no reason to interfere in the order of CIT(A). Thus the ground of appeal of the Revenue is dismissed. 29. Ground No.4 is with respect to....
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....re and therefore the ratio of decision of Hon'ble Apex Court in the case of Southern Switchgear (supra) are not applicable. He has further given a finding that the royalty has already been disallowed by the TPO and the disallowance once again made by the AO results in double disallowance. Before us, no fallacy in the findings of CIT(A) has been pointed out by the Revenue. In such a situation we find no reason to interfere with the findings of CIT(A) and thus the ground of the Revenue is dismissed. 35. Ground No.5 is with respect to deleting the addition of Rs. 3,32,634/- on account of excess claim of depreciation on computer accessories. 36. During the course of assessment proceedings, it was noticed by the AO that assessee had claimed depreciation @ 60% on computer, UPS and printers. The AO was of the view that UPS, printers etc. are not part and parcel of the computer but are part of machinery on which depreciation is to be allowed @ 25% and not @ 60% as claimed by the assessee. He accordingly worked out the excess depreciation at Rs. 3,32,634/- and disallowed the same. 37. Aggrieved by the order of AO, assessee carried the matter before the CIT(A). CIT(A) while deciding the i....