AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 1547
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....te Limi ted ('RNIPL' ), a domestic group company, is a transaction for the purposes of Chapter X of the Income-tax Act, 1961 (the Act'). (b) On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in holding that the transaction between the Appellant and RNIPL is a deemed international transaction within the meaning of section 92B(2) of the Act. (c) On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in holding that the Appellant and RNIPL are associated enterprises within the meaning of section 92A of the Act. (d) On the facts and circumstances of the case and in law, the Hon 'ble CIT(A) erred in upholding the adjustment under section 92C(3) of the Act despite the fact that the Assessing Officer had not made the adjustment on the basis of any method under section 92C(1) of the Act. (e) On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the transfer pricing adjustment of Rs.1,86,17,406/- on account of notional interest on the outstanding receivables from the domestic group company, RNIPL. The Appellant craves leave to add, a....
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....7.05.2004 for providing network services, therefore, the A.O concluded that the transaction between M/s Reach Network India Pvt. Ltd, an AE and the assessee company were in the nature of a 'deemed' international transaction within the meaning of Sec. 92B(2) of the Act. On the basis of his aforesaid deliberations, the A.O was of the view that the non-charging of interest by the assessee company on the amount of Rs.20,68,60,069/- that was due from M/s Reach Network India Pvt Ltd. since 31.03.2011, could safely be held to be a transaction that had not been carried out at arm's length price. It was observed by the A.O, that the assessee could have beneficially earned an income of Rs.1,86,17,406/- i.e @ 9% per annum (interest rate prevailing on bank deposits in India) on the aforesaid amount so receivable from its AE. Accordingly, the A.O carried out an adjustment of Rs.1,86,17,406/- under Sec.92C of the Act and assessed the income of the assessee company under the normal provisions at Rs.3,59,58,610/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). In the course of the appellate proceedings, it was inter alia submitted by the assessee that as the transact....
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....ore adverting to the adjudication of the issue under consideration, we feel that it would be relevant to cull out the definition of an international transaction as is envisaged in Sec. 92B of the Act, which reads as under: "Meaning of international transaction. 92B. (1) For the purposes of this section and sections 92, 92C, 92D and 92E, "international transaction" means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises. (2) A transaction entered into by an enterprise with a person other than an associated enterprise shall, for the purposes of sub-s....
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....l documentation such as laboratory notebooks, technical know-how; (c) artistic related intangible assets, such as, literary works and copyrights, musical compositions, copyrights, maps, engravings; (d) data processing related intangible assets, such as, proprietary computer software, software copyrights, automated databases, and integrated circuit masks and masters; (e) engineering related intangible assets, such as, industrial design, product patents, trade secrets, engineering drawing and schematics, blueprints, proprietary documentation; (f) customer related intangible assets, such as, customer lists, customer contracts, customer relationship, open purchase orders; (g) contract related intangible assets, such as, favourable supplier, contracts, licence agreements, franchise agreements, non-compete agreements; (h) human capital related intangible assets, such as, trained and organised work force, employment agreements, union contracts; (i) location related intangible assets, such as, leasehold interest, mineral exploitation rights, easements, air rights, water rights; (j) goodwill related intangible assets, s....
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.... between the assessee and M/s Reach Network India Pvt.ltd., being a transaction between two domestic AEs, cannot be brought within the realm of the definition of an international transaction as envisaged in Sec.92B of the Act. As regards the observations of the lower authorities, that as M/s Reach Holdings, Mauritiusi.ethe parent company is holding 100% shareholdingin the assessee company and also 99% shareholdingin M/s Reach Network India Pvt. ltd, therefore, the same would suffice for concluding that the aforesaid two enterprises i.e M/s Reach data Services India Pvt. Ltd. (the assessee) and M/s Reach Network India Pvt. ltd. are to be deemed to be AEs during the year under consideration, to the said extent, we are persuaded to subscribe to the view of the lower authorities. Although, we are in agreement with the observations of the lower authorities that the assessee and M/s Reach Network India Pvt. ltd. are AEs under Sec. 92A(2) of the Act, however, merely on the said count a transaction inter se cannot be held to be an international transaction. As the requisite conditions for characterising a transaction as an "international transaction" within the meaning of Sec. 92B is not s....
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.... Ltd., vs. ACIT, Circle 2(1), Hyderabad ITA.No.1814/Hyd/2012 dated 22.08.2013 and in the case of M/s. Swarnandhra IJMII Integrated Township Development P. Ltd., vs. DCIT, Circle 3(3), Hyderabad in ITA.No.2072/ Hyd/2011. Since the TPO does not have any jurisdiction to examine the domestic transactions in the impugned assessment year, the DRP has rightly held that stand of the TPO fails. Since the decision of the DRP is in tune with the pronouncements of the ITAT on similar issues that domestic transactions cannot be examined under T.P. provisions for the impugned assessment year, we have no hesitation in upholding the order of the DRP." 5.1. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of A.Y. 2009-2010, we respectfully follow the decision of the Coordinate Bench of this Tribunal for A.Y. 2009-2010 and uphold the order of the DRP directing the A.O. not to make any addition on account of T.P. adjustment in respect of the transactions of the assessee company with M/s. Mylan Laboratories Ltd., involving payment of management fees. The appeal of the Revenue is accordingly dismissed." On the basis....