TaxTMI 
TaxTMI 
2019 (10) TMI 1547
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.... 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, alter, modify and withdraw all or any of the above grounds of appeal at or before the time of....
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.... 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 transaction with its related party i.e Reach Network India Pvt. Ltd was a transaction between two domestic relate....
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....ut 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-section (1) be [deemed to be an international transaction] entered into between two associated enterprises, if there exists a prior agreeme....
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....ta 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, such as, institutional goodwill, professional practice goodwill, personal goodwill of professional, celebrity goodwill, general business going concern value; (k) methods, programmes, systems, procedures, campaigns, surveys, studies, forecasts, estimates, customer....
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.... 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 satisfied in the case before us, therefore, we have no hesitation in concluding that san existence of an international transaction, the A.O could not have made an adjustment of Rs.1,86,17,406/- under Sec.92C of the Act. Our aforesaid view is fortified by the order of the coordinat....