TaxTMI 
TaxTMI 
2020 (2) TMI 1668
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....und 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 services and rendering of testing services have been grouped and taken by the assessee are sim....
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....sue 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 allowing the issue in favour of assessee, would become academic in nature and the same are thus, dismissed." 9.....
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....ow : "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 portion of para 24 is reproduced here-in-below : "24. The next issue vide ground of appeal No.6.1 is against the benefit of variation / reduct....
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....l 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 as tested party." 5.1 Further, bringing our attention to the decision of Coordinate Bench of the Tribunal in the case of Abicor Binzel Production (India) Pvt. Ltd. Vs. Dy.CIT in ITA Nos.22....
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....PO/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, as the case may be, for the purpose of comparing the facts of the case and the relevant terms of agreement between the CBDT and the assessee. AO is directed to examine the facts closely and conclude the assessee on the issue of applicability of APA to the assessee‟s case for....
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....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 the assessment year 2008-09 & in ITA No.309/PUN/2014 for the assessment year 2009-10. The same parity of reasoning to be applied and we remit the issue back to the file of the Assessing Officer to adjudicate the issue in lines of the order of the Tribunal in assessee‟s own case for assessment year 2011- 12. Thus, grou....
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....es. 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 authorized to accept or reject the claims of the assesses. The Hyderabad Bench of the Hon'ble ITAT in the case of M/s. Electronics Corporation of India Ltd. has categorically held that is not for either the assessing authority or the appellate authority to decide on the expenditure which will be entitled to weighted deduction u/s. 3....
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....and 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 stated in case of any new machinery or plant which has been acquired and installed after 31-03-2005 further equal to 20% of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii) of section 32 of the Act and submitted that the assessee is entitled to claim additional depreciation. The AO considering the amend....
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....e 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 business. The proviso to clause (ii) of the said section makes it clear that only 50 per cent of the 20 per cent would be allowable, if the new plant and machinery so acquired is out to use for less than 180 days in a financial year. However, it nowhere restricts that the balance 10 per cent would not be allowed to be claimed by the assessee in the next assessment year. The language used in ....
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....uring 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 plant being acquired and put to use for less than 180 days in the previous year, the depreciation was restricted to 50%. Such a situation as in the present case, was considered by the Division Bench of the Madras High Court in Commissioner of Income Tax v/s. Shri T. P. Textiles Pvt. Ltd., 394 ITR 483, the Court referred to the judgment of the Karnataka High Court in Rittal India Pvt. Ltd., (supra) as well as the addition of third pro....
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....ovision 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% unclaimed depreciation would be available to the Assessee in the succeeding Assessment Year. Now the legislation has amended the provision by adding a proviso which, specifically recognizes the said right. The Madras High Court in Shri T.P.Textiles Pvt. Ltd.,(supra) ruled that such proviso being clarificatory in nature, would apply to pending cases, covering past period also. 10. We have no reason to take view different from two High Courts, examining the situation at considerable length. In the result, no questio....