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TaxTMI 
TaxTMI 
2020 (2) TMI 1668
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....es. 3. Ground No. 1 is general in nature, hence, requires no adjudication. 4. Ground No. 2 raised by the assessee challenging the action of AO in rejecting of the aggregation of transactions approach adopted by the assessee for benchmarking its manufacturing activities. 5. Heard both parties and perused the material available on record. As regards to the aggregation of transactions, we note that TNMM prescribes comparability and benchmarking of an individual transaction or a group or class of transactions which are similar in its nature and scope. The assessee has employed this method where as many as 14 international transactions that are, export of manufactured IC engines and components, import of engine parts and components of IC engines for manufacturing, royalty paid/payable for use of technology, payment for market support services, payment of warranty charges, payment of development and testing services, payment of training charges, payment for miscellaneous services, payment of testing charges, payment for certification services, rendering miscellaneous services, rendering of internal audit services, rendering of certification services, payment for management servi....
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....ssets and risks. 8. Heard both parties and perused the material available on record. The similar issue had come up before this Tribunal in assessee's own case wherein the Tribunal held that TNMM is to be applied and the margins of assessee are to be compared with average margins of external comparable companies. For ready reference the relevant portion at para 10 is reproduced here-in-below : "16. The next issue raised vide grounds of appeal No.2.1, 3.1 and 3.2 is against most appropriate method to be applied and whether internal comparability was to be made i.e. profitability of export to associated enterprises was to be compared with domestic sales made by the assessee. The said issue has been adjudicated by the Tribunal in earlier years and it has been held that TNMM method has to be applied and the margins of assessee are to be compared with average margins of external comparable companies. The relevant findings of Tribunal vide order dated 15.05.2018 are in paras 11 and 12 and following the same parity of reasoning, we allow the issue in favour of assessee. However, the issue raised vide grounds of appeal No.3.3 to 3.5 on without prejudice basis, in view of our all....
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....sessee's own case held the PLI of net profit to sales is to be accepted. The relevant portion of para 23 is reproduced here-in-below : "23. We find that this issue also stands covered in favour of assessee by the orders of Tribunal in assessee‟s own case in earlier years and the relevant findings are in paras 13 and 14 of the order dated 15.05.2018, which are being referred to but not being reproduced for the sake of brevity. Hence, the ground of appeal No.5.1 raised by assessee is allowed." 16. In view of the above, we direct the AO to follow the direction of ITAT in A.Y. 2011-12 in assessee's own case in deciding the issue raised in ground No. 6.1, thus, ground No. 6.1 raised by the assessee is allowed. 17. Ground No. 7.1 raised by the assessee challenging the action of AO/TPO in not granting the benefit of +/- 3 percent as per proviso to section 92C(2) of the Act. 18. Heard both parties and perused the material available on record. Similar issue has been decided by this Tribunal in A.Y. 2011-12 in assessee's own case wherein the Tribunal accepted the contention of assessee in granting benefit of variation not exceeding the tolerance margin. The relevant p....
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....same is relevant for the A.Yrs. 2015- 16 to 2019-20. 5. Referring to the issues in the present assessment year under consideration, i.e. A.Y. 2008-09, Ld. Counsel fairly submitted that this year is not actually covered by the said agreement. However, he brought our attention to various decisions as well as the facts relevant to the year under consideration and submitted that the issue stands covered by the said Advanced Pricing Agreement for this year also. In this regard, he filed the following written submissions : "On March 2017, the Appellant has entered into a unilateral APA with CBDT for the transaction of Availing of centralized management, administrative and other services from Honeywell International Inc., USA (H11) (Transaction I). The Agreement is valid from A.Y. 2011-12 to A.Y. 2014-15 (rollback period) and AY.2015-16 to 2019-20 (APA Period). Though, A.Y. 2008-09 is not covered under the APA, the Appellant wishes to submit that the facts of the said transaction are similar to the facts as covered in the APA year. Under the APA, Transactional Net Margin Method ("TNMM‟) was selected the most appropriate method and the AE; i.e. H11....
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....efore even the rules provide that if the International Transactions are same in the year of APA and in the past year than both the parties, assessee and CBDT may agree for applying the agreements contained in APA agreed. ... Needless to say that Ld.TPO/AO shall give due weightage to the Advance Pricing agreement signed by the assessee with CBDT on other issues also (other than the issue of selection of tested party) for determination of ALP and in case of any divergent view, the assessee shall be granted an adequate opportunity to substantiate any claim/arguments on the manner of determination of ALP. 4. In the case of RBS India Development Centre Pvt. Ltd. VS. ACIT (ITA No.5538/Del/2010), the TPO did not take into consideration other income which was in the nature of operating income. The AR placed the APA before the Hon‟ble Bench and pointed out that the other income was part of operating income as per the terms of the Agreement. The issue was restored back to the file of the Ld. AO/TPO for verification of the assessee‟s claim." 6. Considering the above, we are of the opinion that the matter should be remanded to the file of AO/TPO,....
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....Bench of the Tribunal in assessee‟s own case in ITA No.556/PUN/2015 & ITA No.574/PUN/2015 for the assessment year 2010-11 and ITA No.834/PUN/2016 & ITA No.821/PUN/2016 for the assessment year 2011-12 decided on 25.09.2018 wherein at Para 44 of the said order, the Tribunal has given its findings on the issue of disallowance of expenses u/s.14A of the Act which is as follows: "44. The issue raised in grounds of appeal No.8.1 and 8.2 is against disallowance of expenses under section 14A of the Act. The assessee in assessment year 2010-11 has raised similar issue vide ground of appeal No.7.1. The learned Authorized Reprehensive for the assessee pointed out that details are placed at page 385 of Paper book and disallowance in the year would work out to Rs.49,16,894/-. Applying the same as in ground of appeal No.7.1 in assessment year 2010-11, we disallow Rs.49,16,894/- under section 14A of the Act." 7. We have perused the case records and given considerable thought to the judicial pronouncement placed before us. We find that while adjudicating this issue, the Tribunal has placed reliance on the decision in assessee‟s own cases in ITA No.2417/PUN/2012 for th....
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....so not made available by the Assessing officer. We note that the assessee submitted that if AO decides to disallow the above weighted deduction relying on the approval by DSIR, made a request to allow the basic expenditure as revenue expenditure noting that such expenditure is on revenue account and incurred for business purposes. The approval of DSIR is related to weighted deduction u/s. 35(2AB) and non-granting of the approval by DSIR to the above expenses of Rs.1287.33 Lacs would only mean that expenses to the extent of Rs.1287.33 Lacs incurred by our company may not be eligible for weighted portion of (i.e. additional) deduction over and above the amount incurred. The contention of the assessee was considered by the Assessing Officer and he was of the opinion that the DSIR guidelines provide for submission of auditor certificate every year. The DSIR scrutinizes the claims of the assessee and either accepts the same in full or partially. In the present case, the DSIR has accepted the claim of the assessee company except for Rs.12.87 crores. DSIR, being the appropriate authority for the purposes of Section 35(2AB) as well as Section 35(3) of the Income Tax Act, 1961, is authorize....
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....age 140 of the paper book at paras 33 and 34. Thus, in view of the same, ground Nos. 10.1 to 10.4 raised by the assessee are allowed. 30. Ground Nos. 11.1 to 11.4 raised by the assessee challenging the action of AO/TPO for disallowance of claim of additional depreciation in subsequent year. 31. The brief facts relating to the issue on hand is that during the course of assessment proceedings, the AO found the claim of assessee seeking additional depreciation on old plant and machinery. According to him, the said plant and machinery was added in the previous year and requested the assessee to explain as to why the claim of additional depreciation on plant and machinery which was added in previous year is eligible for claiming depreciation in subsequent year. The assessee replied that the additional depreciation for the year under consideration claimed includes additional depreciation of Rs.2,55,68,424/- being 10% of value of additions of Rs.25,56,84,241/- which were added after 04-10-2011. Further, it was contended that the provisions u/s. 32 of the Act allows depreciation on fixed assets acquired during the relevant previous year as well as in earlier years. Further, it was st....
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....he Revenue has raised the question - whether when 50% of the additional depreciation is claimed by the Assessee in a particular Assessment Year, since the acquisition and putting in to use of the assets in the previous Year was for less than 180 days, the Assessee can claim the remaining depreciation in the subsequent Assessment Year. Such a question came up for consideration before the Division Bench of Karnataka High Court in Commissioner of Income Tax and Another V/s. Rittal India Pvt. Ltd., reported in 380 ITR 423. The Court, after referring to the statutory provisions, held and observed in Para 8 as under: "8:-The aforesaid two conditions, i.e., the undertaking acquiring new plant and machinery should be a new industrial undertaking, or that it should be claimed in one year, have been done away by substituting clause (iia) with effect from April 1, 2006. The grant of additional depreciation, under the aforesaid provision, is for the benefit of the assessee and with the purpose of encouraging industrialization, by either setting up a new industrial unit or by expanding the existing unit by purchase of new plant and machinery, and putting it to use for the purposes of b....
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....his court." After the said judgment of the Karnataka High Court in Rittal India Pvt. Ltd.,(supra), legislation has also amended the statutory provisions by adding the third proviso to clause (ii) of sub-section 1 of Section 32 of the Act, which reads as under:- "Provided also that where an asset referred to in clause (iia) or the first proviso to clause (iia), as the case may be, is acquired by the assessee during the previous year and is put to use for the purposes of business for a period of less than one hundred and eighty days in that previous year, and the deduction under this subsection in respect of such asset is restricted to fifty per cent of the amount calculated at the percentage prescribed for an asset under clause (iia) for that previous year, then, the deduction for the balance fifty per cent of the amount calculated at the percentage prescribed for such asset under clause (iia) shall be allowed under this subsection in the immediately succeeding previous year in respect of such asset." 8. The third proviso, thus, now recognizes the right of an Assessee to claim the remaining 50% depreciation in subsequent year in a case where machinery and ....
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....for 180 days or more. 11.3:- In our opinion, as indicated above, the amendment is clarificatory in nature and not prospective, as is sought to be contended by the Revenue. The memorandum cannot be read in the manner, in which, the Revenue has sought to read it, which is, that the amendment brought in would apply only prospectively. 11.4:- We are, clearly, of the view that the memorandum, which is sought to be relied upon by the Revenue, only clarifies as to how the unamended provision had to be read all along. 11.5:- In any event, in so far as the court is concerned, it has to go by the plain language of the unamended provision, and then, come to a conclusion in the matter. As alluded to above, our view, is that, upon a plain reading of the unamended provision, it could not be said that the assessee could not claim balance depreciation in the assessment year, which follows the assessment year, in which, the machinery had been bought and used, albeit, for less than 180 days." 9. It could be thus, to seen that the Karnataka High Court in Rittal India Pvt., Ltd., (supra) even without the aid of the statutory amendment held that remaining 50% unclaim....