AI Drafter 
TaxTMI 
TaxTMI 
2023 (3) TMI 704
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.... lead case to decide the issue and the grounds which are forming part of subsequent assessment years will be specially dealt with. GROUND NO.1 3. Ground No.1 being general in nature, needs no specific adjudication. GROUND NOS. 2 TO 4(D) 4. Ground Nos.2 to 4(d) for the A.Y 2011-12 provides as under: The ld.AR for the assessee has drawn our attention to the order passed by the TPO where the profile of the assessee was mentioned as under : "Zuari Cements Ltd., is engaged in the business of production and sale of Portland cement which is used in commercial, industrial and residential construction activities. The company manufactures Blended Cement, Portland Cement and PRIMO concrete cements. The company was a JV between Zuari Industries Ltd. and ClimentFrancais SA and existed as JV until 31st May 2006. Pursuant to CF's acquisition of 50% stake held by ZIL, the company became a wholly owned subsidiary of CF, effective 31st May, 2006. The ultimate holding company is Itlacemntis p.a. During the year ended 31sst December 2007, pursuant to a scheme of amalgamation, Sri Vishnu Cement Ltd., was merged with ZCL with effect from 1st January, 2007. 5. During the year u....
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....n this aspect which reads as under : 9. Feeling aggrieved, the assessee is before us for the grounds mentioned hereinabove. 10. At the outset, the ld.AR for the assessee has drawn our attention to the order passed by the Tribunal in the case of the assessee for A.Y. 2009-10 wherein the co-ordinate bench of the Tribunal considering the nature of the assessment had held as under : "4. We next note with the able assistance coming from both the parties that the assessee's first and foremost argument in principle is qua aggregation of the foregoing transactions followed by adoption of the transactional net margin method (TNMM) as the most appropriate method "MAM"; which in turn, stands declined in the learned lower authorities' respective orders by taking comparable uncontrolled price "CUP" method. It further transpires from a perusal of the case file that neither of the foregoing twin issues require any detailed adjudication as well since we are dealing with consequential second round of remand proceedings wherein the learned co-ordinate bench's order dt.17.04.2015 in assessee's appeal itself had rejected the Revenue's corresponding arguments as under : " Transf....
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....y for the purpose of transfer pricing analysis. Ld.TPO noticed that assessee paid an amount of Rs.12,53,26,000/- to Ciments Francais S.A., as technical know-how and research and other service fee. This payment was paid on an agreement dt.02-08-2000 for getting technical know-how for a period of three calendar years from that effect date. As per renewal of clause at 12.2 it is mentioned that agreement was automatically be renewed subject to Government/Statutory approval for a period of one calendar year at a time in support of the transaction. Assessee has furnished a copy of agreement dt.06-06-2007 effective from 01-01-2007 for payment of royalty @ 2% on sales made to outside parties and 1% on sale to group companies. Even though assessee justified the payment, Ld.TPO however, considered that there is no addition of new technical know-how and compared with financial results of Sri Vishnu Cements Ltd., under the CUP method, to hold that there is no justification for payment of royalty. Accordingly he came to the conclusion that there is no need to pay any amount. Not only that, he also compared some external comparables and came to the conclusion that average pay out on account of t....
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....paid of Rs.38,10,000/- to Bravo Consultancy SPA and Rs.42,10,94,000/- to CTG SPA were also considered and disallowed the same reason and on the basis of the benefit test, in its entirety. Assessee's objections were rejected and the above amounts were disallowed. Another disallowance made by the AO was with reference to reimbursement of expenses under various heads totaling to Rs.51,72,995/-. Thus, in all, an amount of Rs.99,64,85,214/- was treated as adjustment u/s. 92CA. Assessee filed various objections before the DRP but more or less concurred with TPO vide its order dt.25- 11-2013. Assessee is aggrieved. 10. Assessee's objections are multi-fold. Ground No.1 & 2 are general in nature. Ground No.3 & 4, is the method adopted by the TPO and Ground No.5 to 12 are on various disallowances made by the TPO out of various payments made to AE. Each ground has sub grounds which are more or less in the form of submissions. 11. Ld.AR submitted that TPO erred in rejecting the transfer pricing documentation as well as TNMM as most appropriate method. It was the objection that there is no publicly available information on prices charged in independent transactions whi....
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.... the submission that use of trade mark is a business decision and there are benefits to assessee for use of Italcementi Group trade mark and demonstrated by the support of growth in sales volume over a five year period and increase in customer base in the five years and furnished the copies of evidences furnished to the TPO, in support of the submissions. It was further submitted that a publicly available information analysis was undertaken by assessee on the rate of royalty being charged by licensor to a licensee and that analysis came to the range of 1.93%. Therefore, the payment made by ZCL @ 1% on sale was to be considered as arm's length and TPO's determination at NIL cannot be supported, in view of the decision of the Hon'ble High Court of Delhi in the case of CIT Vs. EKL Appliances Ltd., 11.1 Coming to the alleged transfer of economic value of Zuari trade mark to Italcementi Group trade mark, it was contended that there was no migration of economic value as the Zuari brand was owned by the company and is being used in all the sales. It was further contended that AE has not used 'Zuari' brand anywhere in the world for its operations to get any ben....
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....ogy used in various analysis is also faulty. As far as the royalty payment on sales is concerned, as rightly pointed out by the Ld.Counsel, there are no comparable companies which are offering similar services. The TPO's comparison on transactions of assessee subsidiary company much prior to the year under consideration cannot be justified. Therefore, on that basis itself, the comparison cannot be considered as an internal CUP. Moreover, the need for not charging royalty from SVCL was also explained as the subsidiary company was a sick company and in the process of reviving the company, assessee has not charged any royalty to its subsidiary company. Therefore, on FAR analysis, SVSL's past record with that of present transactions of assessee-company is not correct. Then, coming to external comparables, we were surprised to note that the TPO considered the technical fee payments without analyzing the nature of the payments. In some cases, it is royalty for acquiring the lime stone from Govt., which is not a 'royalty' for getting the technology from foreign AE. There is foreign exchange expenditure also considered as 'technical know-how fee'. A detailed objecti....
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....orders and direct the TPO to re-consider the entire order and analyse them in fresh, first by determining the most appropriate method and then analyzing the transactions under the provisions of the TP. The orders of the TPO/DRP on the TP issues are therefore set aside and the entire issue on TP analysis is restored to the file of AO for fresh consideration. The grounds raised are accordingly allowed for statistical purposes." 5. The Revenue vehemently contended that the learned lower authorities have rightly adopted a direct method i.e., CUP which carries precedence over all other indirect methods; including TNMM, as per Serdia Pharmaceutical India Pvt. Ltd Vs. ACIT (2011) 44 SOT 391 (Mum). We find no reason to accept the Revenue's instant argument more particularly in view of the fact that this is second round of consequential proceedings wherein the earlier learned co-ordinate bench had already rejected the very contentions seeking to decline both aggregation as well as TNMM; as the case may be (supra). 6. The Revenue's next vehement contention before us is that the assessee had not even furnished the relevant details having adopted aggregation as well as TNMM m....
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....y is not correct. Then, coming to external comparables, we were surprised to note that the TPO considered the technical fee payments without analyzing the nature of the payments. In some cases, it is royalty for acquiring the lime stone from Govt., which is not a 'royalty' for getting the technology from foreign AE. There is foreign exchange expenditure also considered as 'technical know- how fee'. A detailed objections of the assessee were not even considered or discussed either by the TPO or by the DRP. Therefore, on the basis of an external CUP ALP of 0.91% itself is not correct. Therefore, the entire exercise undertaken by the TPO on this issue is erroneous and cannot be justified. 14. Leave alone that amount, even the sub license fee for the use of trade mark is also faulty. Under the guise of TPO provisions, the TPO cannot determine the ALP at NIL as held by the Hon'ble Delhi High Court in the case of CIT Vs. EKL Applicances Ltd., (supra). Therefore, rejecting the entire payment without there being any analysis on the CUP method cannot be accepted. In the guise of analyzing the transactions in the CUP method, the TPO has not brought any evidence o....
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....argument more particularly in view of the fact that this is second round of consequential proceedings wherein the earlier learned co-ordinate bench had already rejected the very contentions seeking to decline both aggregation as well as TNMM; as the case may be (supra). 6. The Revenue's next vehement contention before us is that the assessee had not even furnished the relevant details having adopted aggregation as well as TNMM method in the consequential proceedings. We find no substance in the Revenue's instant last argument as well since this is once again a second round of assessment wherein no such objections had been put forth from the departmental side in the former round. Be that as it may, we therefore accept the assessee's contentions seeking to imply "aggregation" as well as TNMM method and leave it open for the "TPO" to finalize the consequential computation as per law. We further make it clear that it shall be very much open for the assessee to file on record all the necessary details pertaining to the comparable(s) list submitted in "TNMM" in the consequential computation. Ordered accordingly." 12. On the basis of the above, it was submitted by ....
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....M as most appropriate method for benchmarking. Further on perusal of the record, we found that the TPO had no occasion to benchmark the transactions by applying TNMM, and thereafter applied CUP method. We accordingly send back these issues to the file of AO / TPO with the direction to work out the international transactions by applying TNMM as most appropriate method and determine the ALP. Accordingly, the grounds 2 to 4(d) raised by the assessee are allowed for A.Y. 2011-12. 18. Having decided the issue for A.Y. 2011-12, we would like to mention that the international transactions mentioned by the TPO for A.Y. 2012-13 to the following effect : Name of AE Nature of transaction Amount (INR) Ciment Francais SA Technical know-how and research and other fee 13,51,55,686 Ciment Francais SA Sub-license trademark fee For use of Trademark 6,59,49,226 Inter bulk Trading SA Sale of Clinker 9,32,50,303 Italcementi Fabbriche Riunite Cemento SpA Procurement services fee paid 72,27,381 Bravo Solutions SpA E-Procurement services fee paid Consultancy 88,18,278 CTG SpA Consultancy services fee paid 8,26,52,781 Ciment Francais S....
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.... 2011-12, we also allow the T.P grounds raised by the assessee in these set of appeals, namely, ITA 254/Hyd/2017, ITA 182/Hyd/2018 and ITA 66/Hyd/2019. Accordingly, the TPO / AO is directed to apply TNMM as most appropriate method in respect of the international transactions mentioned by the assessee in Form 3CEB and determine the ALP. 20. NON-TRANSFER PRICING ISSUES. Firstly, we will deal with ground Nos. 5(a) and 5(b): With respect to grounds 5(a) and 5(b) for A.Y. 2011-12, the ld. AR had drawn our attention to the draft assessment order dt.31.03.2015 wherein at Page 3, the Assessing Officer has mentioned as under : "The assessee debited to Profit and Loss Account an amount of Rs.9,56,82,000/- towards cash discounts. The assessee has not filed any proof in respect of discounts given and in view of the same, the assessee's claim is disallowed." Feeling aggrieved by the draft assessment order dt.31.03.2015, assessee had filed objections before the DRP and the DRP dealt with the issue at Pages 32, 33 and 34 to the following effect. "3. Other than TP adjustments. 3.1 Objection No.11 - Disallowance of Cash Discount The learned AO has err....
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...., Apart from all these discounts, Company also offers cash discount for early realization of its debt. Providing all these kinds of discount is essential for the smooth operations of the business. Further, it is normal industry practice followed by various companies to provide cash discounts to customer. Therefore, it cannot be said that just because company is offering various other types of discount, cash discount is not warranted. Offering cash discount is the management decision to carry out business activity of the company effectively. Having considered the submissions, it is noticed from the assessment order that the assessee failed to furnish any evidence to support such cash discounts, in such circumstances, we are of the view that the A.O. was justified in disallowing such claim as the assessce lies to submit the evidences that such expenses have been incurred wholly and exclusively for the purpose of the business carried on during the year, for allowing deduction u/s 37(1) of the Act. The objection is accordingly rejected." 21. As there was no evidence filed by the assessee to show that the expenses were incurred wholly and exclusively for the purpose....
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....sh discount, Page Nos.5-6 of Additional Evidence Paper Book Sample workings of cash discount given by the Company, Page No.7-20 of Additional Evidence Paper Book." 21. On the other hand, the ld.DR had submitted that no evidence was filed before the AO during the assessment proceedings or during the first appellate proceeding before the DRP and therefore, the same is now entitled to any relief. It was further submitted that even the application filed by the assessee under Rule 29 dt.09.05.2018 is required to be rejected. 22. We have heard the rival contentions of both the parties and perused the material available on record. The draft assessment order was passed in this case by Assessing Officer on 31.03.2015 and thereafter, the DRP has issued directions on 29.12.2015 and the final assessment order was passed on 25.02.2016 and thereafter, the assessee has filed the present appeal before us dt.23.05.2016. After filing of the appeal before this tribunal, the assessee filed the application for admission of the additional documents only in the year 2018. In our view, sufficient opportunities were given by the lower authorities however despite grant of opportunities, the a....
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....scretion of the Tribunal to permit additional evidence to be adduced to enable it to pass orders or, in its opinion, if there is any substantial cause for receiving additional evidence. The expression "or for any other substantial cause" occurs in rule 27(1)(b) of Order 41, Civil Procedure Code, and this expression has been the subject-matter of decisions by the Privy Council, Supreme Court and High Courts. In Parsotim Thakur v. Lal Mohar Thakur AIR 1931 PC 143it was held that the words "for any other substantial cause" must be read with the word "requires" in the beginning of the sentence and it is only where the appellate court requires any document to be produced or any witness to be examined that this rule will apply. The discretion to receive additional evidence is to be exercised only when any point is required to be cleared up in the interests of justice. This power given to the Tribunal has to be exercised cautiously and sparingly in order to advance the interests of justice. Rule 29 is not intended to allow an assessee who has been unsuccessful throughout to patch up the weak parts of his case or to fill up omissions. It is well settled that a party guilt....
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....consider the evidence submitted by the assessee before DRP for A.Y. 2009-10. Thereafter, the AO in final assessment order dated 30.1.2014 for Assessment Year 2009-10 had allowed the deduction on account of cash discount . Assessing Officer at Page 5 of the final assessment order which is to the following effect. 23. Admittedly, the DRP has given the opportunity to the assessee for A.Y. 2009 - 2010 for producing the evidence / documents to prove the disallowance on account of cash discount given to the consumers. Before us, the assessee had filed the application for admitting the additional document to show that the actual discounts are offered and given to the various consumers / concerns and the same was required to be treated as business expenditure while computing the income of the assessee. The Ld.AR has submitted that a separate application dated 9.5.2018 was filed for the purposes of admitting the additional evidence filed by the assessee. The assessee has given the reasons for not filing the said document before the lower authorities and had submitted that this additional document be permitted to be file on record. As noted hereinabove the assessee was negligent in not fo....
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....rred in not considering the submission made assessee in this regard. (iii) The learned AO ought to have granted depreciation on 'goodwill based on the directions given by the DRP members for the AY 2010-11. It is submitted that in the Assessee's own case for AY 2010-11, the Honorable DRP has directed the leaned AO to allow the clam for depreciation on Goodwill, Based on the same, depreciation on goodwill should be allowed to the Assessee for the AY 2011-12 also. Having considered the submission , we direct the A010 allow the depreciation issued by the DRP in AY. 2010-11, in accordance with the provisions of the Act. 32. The AO while passing the final assessment order has dealt with the issue at Pages 4 and 5 of the order to the following effect : B(iii) Depreciation on Goodwill: The assessee has claimed depreciation on goodwill of Rs.16,60,91,410/- by filing a letter dt.05.02.2015 before the Assessing Officer request for allowance of depreciation on goodwill. Before the Hon'ble Dispute Resolution Panel it was submitted that in assessee's own case for Asst. Year 2010-11 the Hon'ble Dispute Resolution Panel has directed the Assessing Off....
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.... claim of the assessee on the basis of the reasons mentioned hereinabove. It was submitted by the ld.AR that the similar issue was arose in A.Y. 2010-11 and the Tribunal order dt.05.08.2016 has allowed the claim of the assessee. 34. Per contra, the ld.DR for the Revenue has submitted that against the first order on 17.04.2015 in ITA 471/Hyd/2014, the issue of the depreciation was dealt by the Tribunal in Para 15.2 and 15.3 which read as under : "15.2 We have to accept that judicial principles relied on by assessee are very clear that assessee can raise any additional ground on legal matters, however, rider is that the facts should be available on record. Assessee submitted that the merger took place w.e.f. 01-01-2007 i.e., in A.Y.2007-08. We are considering appeal in AY.2009-10. How, the goodwill arose what is the amount and why assessee has not claimed depreciation and other issues require examination in AY.2007-08. In AY.2009-10, if a depreciation was allowed on an asset which is in the block of assets in earlier year, only consequential depreciation can be allowed. Since assessee is claiming fresh depreciation on the goodwill, which arose in AY.2007-08, we cannot all....
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....ebut the same, the ld. AR has filed written submission dt.29.04.2022 which was reproduced below : "During the course of hearing conducted on 21.04.2022, relating to grounds relating to disallowance of depreciation on goodwill, in each of the subject assessment years it was for the Appellant before this Hon'ble Bench that the Assessing submitted by the Officer ("AO") has erred in not allowing the claim of depreciation on goodwill in terms of the judgment of the Hon'ble Supreme Court in the case of Smifs Securities Limited vs. Commissioner of Income-tax, Kolkata (2012) (348 ITR 302). In view thereof, a query was raised by the Hon'ble Bench as to whether the allowability of the said claim was affected by the amendments brought about in section 2(11) (definition of block of assets) and Section 32(1)(ii) of the Income Tax Act, 1961 ("the Act") vide Finance Act, 2021. In connection with the above, itis most respectfully submitted that the said amendments made by the Finance Act, 2021 are applicable only from 01.04.2021 and have no retrospective application. Hence, the amendments do not in any way restrict or effect the allowability of the claim of d....
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....me for A.Y. 2007-08 would have bearing on the subsequent assessment year, as the valuation as on 01.04.2007 or thereafter when the goodwill was acquired by the assessee on amalgamation would be the commencing point for determining the depreciation on the Goodwill. Accordingly, grounds 7(a) and 7(b) are allowed for statistical purposes. GROUND NOS. 8(A), 8(B), 9 AND 10 40. At the outset, ld.AR for the assessee submitted that, the assessee is not pressing ground Nos. 8(a), 8(b), 9 and 10 and hence, requested that the same may kindly be dismissed as not pressed. 41. In view of the submission of ld.AR, we are hereby dismissing ground Nos.8(a), 8(b), 9 and 10 as not pressed. The grounds are dismissed accordingly. GROUND NOS.11 TO 15 42. Next, we will deal with ground No.11 to 15. The assessee had filed a letter before the DRP on 20.07.2015 whereby the assessee sought to raise the additional grounds of objections. The contents of said letter are reproduced below : "We refer to the captioned objection for the AY 2011-12 which was filed on May 5, 2015. The Assessee would like to file additional ground of objection with respect to the following: ....
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.... matter is required to be remanded back to the file of Assessing Officer with a direction to consider the objections raised by the assessee namely, ground nos.11 to 15 before the DRP afresh and pass an appropriate order in accordance with the law. In our view, whether the DRP was under an obligation to consider and decide the grounds afresh before it by the assessee is not come under res integra and the same has been accepted by the Tribunal in many matters, referred hereinabove by the assessee in the written submissions. 46.1 the Ld. DR for the revenue relied upon the order passed by the lower authorities 47. We have heard the rival contention the parties and perused the material of liberal on record .In the Case of Electrosteel Castings Ltd Vs. DCIT , the Calcutta tribunal in paragraphs 54 and 55, after reference to the decision of the Hon'ble Supreme Court in the matter of Goetze (India) Limited had held as under : "54. As far as ground No. 3 raised by the Revenue is concerned, the issue that arise for consideration is as to whether the Dispute Resolution Panel could have directed the Assessing Officer to entertain the claim of the assessee that sales Tax remissio....
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....e any direction under sub-section (5) for further enquiry and passing of the assessment order.' It is manifest from the prescription of sub-section (8) that the DRP has been empowered to confirm, reduce or enhance the variations proposed in draft order. There is specific prohibition contained in the provision to the effect that the DRP cannot set-aside any proposed variation or issue any direction for further enquiry and passing of the assessment order." 49. In view of the above, it is crystal clear that once the additional grounds were raised by the assessee before DRP, then it is required to be adjudicated by the DRP. Accordingly, we are of the view that these grounds are required to be remanded back to the file of Assessing Officer for passing an order in accordance with the law as provided under Chapter X of the I.T. Act. Needless to say that before passing an order, the AO shall pass a draft assessment order and thereafter, if the assessee is aggrieved with the draft assessment order, then assessee may prefer proceedings before DRP or in any forum as provided and thereafter, the final assessment order shall be passed by the Assessing Officer. Thus, the ground Nos. 11 to 15 ....
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....espect to the travel expenses of the employees. The issue is identical to that of the last year. Sri T. Poornananda Sai, and Sri Gopinath have been deputed to France on behalf of CF for assistance. As per the agreement, it is agreed that no mark up shall be added to the actual costs incurred on salary, allowances, bonus, leave, provisions, social security / welfare contributions, insurance premiums, out of pocket expenses, etc. The services provided by the employee of the taxpayer are of high-end as the concerned employee was a highly trained expert, who can handle technical requirements related to project implementation. Therefore, the said service cannot be reimbursed at cost. At arm's length, the services rendered by the taxpayer by way of employees secondment to overseas locations has to be marked up at cost plus 33.37%, which taxpayer earns in India. Out of the total expenditure of Rs. 1,43,86,477/- cost and reimbursed the balance by is the towards AEs a sum of Rs.23,41,868/- is towards salary third party payment. The arm's length compensation for the services rendered i.e. salary cost of Rs.23,41,868/- to CF by deputing the personnel of the ....
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....justified on the facts of the case. Therefore, we are not in a position to uphold any of the contentions raised by TPO in his order. Likewise, the disallowance of various service fees including reimbursements made by assessee to AE. Since we do not find any valid reason for TPO to disallow these expenditures, we have no other go than to set aside the entire order of the TPO which is based on wrong presumptions and propositions." The assessee also relied on the directions of the Hon'ble DRP in assessee's own case for AY 2011-12 wherein the Hon'ble Panel vide Para 2.9 of its Direction held that the TPO has not given any rationale for computing a mark-up of 33.37% and accordingly, directed the AO to delete the proposed adjustment. During the year, the assessee deputed its employees to CF where the employees had remained under the supervision and control of CF. The salary cost of these employees incurred by the assessee during the period has been charged back by the assessee to CF. Hence, CF has reimbursed salary expenses at cost to the assessee. Further, the assessee has also recovered stay and & travel expenses incurred on behalf of CF at 'actuals....
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....r services. Therefore, we conclude that there should be some benefit to the assessee with the deputation of technical expert and therefore, we do not find any reason to interfere with the decision of learned lower authorities. Accordingly, this ground is dismissed. 62. NON-TRANSFER PRICING ISSUES. GROUND NO.12. Firstly, ground No.12 - Disallowance of depreciation on goodwill. This issue was already decided by us while deciding lead appeal ITA 616/Hyd/22016 at Para 38(supra) wherein we held that the matter may be remanded to the file of jurisdicitonal Assessing Officer with a direction to the Assessing Officer to consider the evidences filed on record for A.Y. 2007-08 for arriving at the valuation of the goodwill after amalgamation of the companies. The value attached to the goodwill in the said assessment year shall be considered for the purpose of allowing the depreciation on the basis of the rate as provided by the Act / Rules. Following the same reasoning, this issue is remanded back to the file of jurisdictional Assessing Officer. Accordingly, ground No.12 is allowed for statistical purposes. GROUND NOS.13 AND 14 63. Coming to ground nos.13 and 14 of this appeal,....
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.... Ltd. vs. Commissioner of Income Tax10 in support of the objection pressed before us that it is not open to entertain fresh claim before the ITAT. According to him, the decision in National Thermal Power Co. Ltd.11 merely permits raising of a new ground concerning the claim already mentioned in the returns and not an inconsistent or contrary plea or a new claim. We are not impressed by this argument. For, the observations in the decision in Goetze (India) Ltd.12 itself make it amply clear that such limitation would apply to the "assessing authority", but not impinge upon the plenary powers of the ITAT bestowed under Section 254 of the Act. In other words, this decision is of no avail to the department." 67. In view of the categorical decision of the Hon'ble Supreme Court, we have no doubt that the lower authorities are duty bound to decide the issue even if the claim has not been filed in the return of income or in the revised return of income. 68. In light of the above, we deem it appropriate to remand the matter back to the file of Assessing Officer with a direction to examine the case afresh after considering the decision of Hon'ble Supreme Court in the case of CIT Vs. Woo....
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.... in ITA 616/Hyd/2016 for A.Y. 2011-12, therefore, respectfully, following the same, we remand this ground to the file of Assessing Officer. GROUND NOS. 2 AND 3 75. Ground nos. 2 and 3 are related to ECB. The DRP in Para 2.14 had held that ECB loan was taken for purchase of fixed assets and any loss caused to the assessee on account of foreign exchange fluctuation would come within the purview of the section 43A of the Act. However, the ld.AR had disputed the applicability of 43A of the Act on the transactions and had submitted that the matter may be remanded back for fresh examination in the light of the decisions of hon'ble Supreme Court in the cases of Woodward Governor and Wipro (supra). We have heard the rival contentions of both the parties on identical facts, we have remanded the matter to the file of Assessing Officer, therefore, we issue similar direction as done in lead appeal in ITA 616/Hyd/2016 and remand back the matter to the file of Assessing Officer for fresh examination. Accordingly, ground nos. 2 and 3 are allowed for statistical purposes. GROUND NOS 4 TO 6 76. Coming to ground nos.4 to 6, these grounds were already dismissed as not pressed (supra). Hen....
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....the operation. This statutory requirement was not met, no information or evidence was filed as to the expenditure incurred in reclaiming and rehabilitating the affected land. The assessee appears to be merely creating provision year after year without actually fulfilling the statutory mandate. Without fulfilling the public interest mandate contained in the legislative provision, the assessee cannot be allowed to claim tax benefit by merely creating provision. The AO is justified in disallowing the claim. The proposed addition is upheld." 80. It was submitted by the ld.AR that this ground of the assessee is required to be allowed as the assessee has provided scientific basis for the purpose of claiming the charges for site restoration. Per contra, the ld.DR has relied on the order of lower authorities. 81. We have heard the rival submissions and perused the material on record. As the assessee willing to provide the necessary scientific information to show that the expenditure was incurred by it in reclaiming and rehabilitating the affected land. In the light of the above, we remand back this issue to the file of Assessing Officer with a direction to the assessee to provide all....
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....arrying out the international transactions. 77. In the light of the above, we are of the opinion that this issue is required to be remand back to the file of Assessing Officer with a direction to the assessee to provide the necessary evidence for rendering of services etc to the satisfaction of Assessing Officer. Accordingly, this issue is allowed for statistical purposes. Needless to say while giving effect to the direction of the tribunal order, the assessing officer/ TPO, shall follow the principle of natural justice by affording opportunity of hearing to the assessee in accordance with. 78. IN THE RESULT, the appeal of the assessee in ITA No.66/Hyd/2019 for A.Y. 2014-15 is partly allowed for statistical purposes. 79. To sum up, the appeal of assessee in ITA No.2169/Hyd/2018 is dismissed and the remaining i.e., ITA No.616/Hyd/2016, 254/Hyd/2017, 182/Hyd/2018 and 66/Hyd/2019 are partly allowed for statistical purposes. Order pronounced in the Open Court on 27th June, 2022. ============= Document 1 That on the facts and in the circumstances of the case, the Hon'ble Dispute Resolution Panel (Hon'ble DRP)/Learned Assessing Officer (Ld. AO) erred in making an addi....
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....or commercial value was derived by the appellant. 4.(c) That on the facts and in the circumstances of the case, the Hon'ble DRP/Ld. AO erred in disregarding the external CUT search performed by the appellant to justify the ALP of the international transaction pertaining to the payment of sub-license fee without giving any cogent reasons. 4.(d) That on the facts and in the circumstances of the case, the Hon'ble DRP/ Ld. AO has grossly erred in not following the order of the Hon'ble ITAT in the appellant's own case for AY 2009- 10. 5.(a) That on the facts and in the circumstances of the case, the Hon'ble DRP/Ld. AO has grossly erred in not allowing cash discount of Rs. 9,56,82,000/- in computing total income under the provisions of the Act other than 115JB. 5.(b) That on the facts and in the circumstances of the case, the Ld. AO/Hon'ble DRP has grossly erred in not granting sufficient opportunity to the appellant to produce evidences in support 16 of claim of cash discount. That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in not allowing write off of loans and advances of Rs. 4,50,451/-in computing to....
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....ts and in the circumstances of the case, necessary directions may be given to the Ld. AO to allow deduction in respect of provision for obsolescence of stores and spares of Rs. 21,14,056/- debited to the Profit & Loss Account in computing total income under the provisions of the Act other than 115JB. 12 That on the facts and in the circumstances of the case, necessary directions may be given to the Ld. AO to allow deduction in respect of provision for site restoration fund of Rs. 1,16,39,802/- debited to the Profit & Loss Account in computing total income under the provisions of the Act other than 115JB. Document 4 13. 14. 15. That on the facts and in the circumstances of the case, necessary directions may be given to the Ld. AO to allow deduction in respect of community development expenses of Rs. 46,56,216/- debited to the Profit & Loss Account in computing total income under the provisions of the Act other than 115JB. That on the facts and in the circumstances of the case, necessary directions may be given to the Ld. AO to allow deduction in respect of environment protection expenses of Rs. 32,78,989/- debited to the Profit & Los....
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.... Knorr Bremse India Pvt Ltd in paragraph 44 in regard to applicability of TNMM vs CUP in respect of the various international transactions has held as under :- "In the present case, all the items tabulated above were not provided by the same entity. They were provided by different entities. That these entities were all part of the same group is not determinative of the issue whether they were part of a single international transaction. Each party to the group is a separate legal entity. We do not rule out the possibility of there being a single international transaction where goods are sold and/or services are supplied by various entities within a group under a single transaction. That however, would depend upon the facts of each case. The onus would be on the assessee to establish that though the goods were supplied and/or the services were rendered by different legal entities they were part of an International transaction pursuant to an understanding between the various members of the group. would be an issue of fact for the determination of the authorities under the Act." This In the case before us, it is noticed by us that the....
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....part of an international transaction, i.e. a composite transaction." If the rationale of the observation of the Hon'ble Punjab & Haryana High Court is applied to the present case, it is an undisputed fact that the assessee entered into independent agreements for payment of licence fee and management fees, and therefore, such transactions cannot be aggregated with the evaluation of manufacturing under TNMM. The view also finds support from the decision of the Hon'ble ITAT, New Delhi, in the case of JCB India Ltd. vs. DCIT, in ITA No.1075/Del/2016, wherein, in paragraph 7.6, held that "Nitty gritty of the above discussion is that aggregation of related transactions is permissible, but there is no rule that all the related and unrelated transactions can be combined and shown at ALP under the TNMM on entity level. The Hon'ble Punjab & Haryana High Court in ITA No.1075/Del/2016 Knorr-Bremse India P. Ltd. vs. ACIT (2016)380 ITR 307 Document 8 (P&H) has held that in order to combine two or more transactions, it is essential that they should be either inextricably linked to each other either by way of a package deal or that a number of transac....
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.... 3: Payment for Technical Know-how and related service fee is at arm's length Ground No. 1: The learned TPO erred in concluding that the ALP of the technical know-how and related service fee is 0.61% of sales and thereby arriving at the TP adjustment amounting to a sum of Rs.3,86,16,198. Ground No. 2: The learned TPO failed to examine the evidence including commercial agreement filed by the assesse to demonstrate that the expenditure was incurred for obtaining the operational efficiency in production of cement. Ground No. 3: The learned TPO erred in rejecting external Comparable Uncontrolled Transaction ("CUT") searches performed by the assessee to justify the ALP of the international transaction pertaining to payment of royalty. The assessee had relied on the results of the following searches for comparable agreements: External search identifying four comparable agreements with an arithmetic mean royalty rate of 2.75%; External search identifying eight comparable agreements with an arithmetic mean royalty rate of 2.78%; and Internal CUP agreement, whereby AE of ZCL charged royalty at 2.5% on Kronos International for use of technic....