TaxTMI 
TaxTMI 
2019 (10) TMI 1555
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....and factual submissions made by the Appellant in regard to the fact that the adjustment made by Ld. AO / Ld. TPO would have a futuristic impact on the income of the Appellant. 4. That the Learned Deputy Commissioner of Income Tax, Circle-2(1), Gurgaon ["Ld. AO"] / the Learned Additional Commissioner of Income Tax, Transfer Pricing Officer-l(3), New Delhi ["Ld. TPO"] erred on facts and in law by holding that its international transaction pertaining to payment of development cost does not satisfy the arm's length principle envisaged under the Act. 5. That the Ld. AO / Ld. TPO erred on facts and in law by disallowing the payment of development cost and holding that the corresponding depreciation on this cost in subsequent years be disallowed, and in doing so the Ld. AO / Ld. TPO grossly erred in: 5.1 disregarding the arm's length price, as determined by the Appellant in the transfer pricing documentation maintained by it in terms of section 92D of the Act read with Rule 10D of the Rules and holding that Transactional Net Margin Method is not the most appropriate 5.2 disregarding the fact that the international transactions undertaken by the Appellan....
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.... 48,640,000 5. During the TP assessment proceedings the assessee was questioned about the international transaction related to the payment of development cost. The relevant queries raised read as under :- 1. In the course of the aforementioned proceedings, there are certain issues to which attention is sought to be drawn. These issues concern the international transactions related to the payment of development cost. This is the description that is found in your transfer pricing report (TP report]. Your form 3CEB describes this as purchase of technical know-how. By whatever name called, you have paid Rs.19,800,000. Transfer pricing approach of the assessee 2. Your TP report has aggregated this transaction with other international transactions like the purchase of capital goods. You have used the Transactional Net Margin Method (TNMM) as the most appropriate method and operating profit/sales (OP/Sales) as the profit level indicator. 3. Admittedly during the year you have not commenced commercial production and hence you have not earned any revenues. Hence, to give some meaning to the MAM that you have chosen you have projected your income for....
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.... that none of the international transactions that you have undertaken have any impact on your income. Hence, TP provisions do not apply here. You have relied upon the decision of the Hon'ble Bombay High Court in the case of Vodafone India Services Pvt Ltd (WP No. 871/2014). 12. The reliance on this decision is misplaced. The point of examination there was whether an international transaction arises in certain cases or not. That is not an issue in your situation. There is no doubt that an international transaction has been undertaken. Once that is settled, this office has to determine the arm's length price (ALP) of that international transaction. The same applies to all the other decisions that you have cited. 13. It is the not the task of the TPO to determine your profit or be concerned whether you have actually made one. The TPO has to determine the ALP of an international transaction. That is what is being done here. 14. This office therefore concludes that in a fact pattern like your case, no independent party would have made a payment of this kind. Therefore, it is proposed to reduce the ALP of the international transaction to NIL The propose....
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....e year under consideration. Section 246A of Income Tax Act provides the orders which are appealable in Income Tax Appeals and the relevant clause is 246A(i)(a) which lays down that the order where the appellant is aggrieved with the income assessed or amount of tax determined or amount of loss computed or the status under which he is assessed is appealable . The order which is intended to be appealed against should have anyone or more of the above mentioned consequence only then such order becomes appealable. This provisions is in-corporated because in any assessment order, there may be number of observations made by the A.O which may not be of any consequences but appellant might not agree with those observations. If such order are made appealable then a number of infructuous litigation would arise which is avoidable. The provisions of Act are very clear with the income assessed, tax demanded, loss computed or status of assessment and if none of these exists, the order is not appealable. In the present case the A.O has observed that depreciation would be disallowed in future as and when the appellant claims the same. The appeal is not maintainable against any such observations mad....