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2021 (11) TMI 1155
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.... Transfer pricing adjustment of Rs. 14,59,70,160 in respect of the international transactions entered by the Assessee with its associated enterprises during the previous year. Accordingly, an amount of Rs. 14,59,70,160 is added to the income of the assessee and brought to tax in the draft assessment order as follows:- Sl. No. Description Adjustment u/s 92CA (in Rs.) 1 Administrative Support Service 14,59,70,160/- Total adjustment u/s 92CA 14,59,70,160/- 3. Aggrieved from the draft order, the assessee raised objection against the addition arising out of TPO order u/s 144C(2)(b) before the DRP. The DRP after taking into consideration the submission of the assessee, issued directions to the TPO u/s 144C (5) of the Act order dated 19.02.2021 to re-compute the margin of 8 comparables. Consequently, the TPO has recomputed the Arm's Length Price and the adjustment as under: Description Amount (Rs.) Original adjustment u/s 92CA by the TPO vide order dated 22.10.2019 14,59,70,160 Adjustment as per DRP order 14,78,43,560 Addition in adjustment consequent to Order of DRP 18,73,400 4. Thus, an addition of Rs.14,78,43,56/- was ....
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....law and fact, by initiating scrutiny proceedings in relation to the specified domestic transaction of payment made by the Appellant towards the fees for administrative support services to the AE, disregarding the deletion of clause (i) of section 92BA of the Act by virtue of amendment by the Finance Act, 2017 w.e.f April 1, 2017. Transfer pricing adjustment on account of re-characterization of payment made for administration support services Treating payment for administrative support services to Cisco Systems India Private Limited ('Cisco India') as an International transaction 5. The learned TPO/AO has failed to appreciate the fact that the agreement between Cisco Capital and Cisco India for availing of administrative support services (which was in the nature of outsourcing of services to Cisco India or deputation services by Cisco India to Cisco Capital) is bona-fide arrangement and the same cannot be treated as an international transaction under section 92B of the Act. Alleging that Appellant has an arrangement with Cisco India and Cisco Systems International BV ("CSI By") whereby Appellant has rendered marketing, sales and administrative supp....
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.... Appellant in its transfer pricing documentation report maintained, c) conducting a fresh economic analysis for identification of comparables (with unreasonable comparability criteria) and determining of the ALP in connection with the impugned specified domestic transaction. Rejection of Non-comparable companies 12. Without prejudice, the learned TPO/ AO has erred, in law and in fact, by selecting certain companies as comparable companies ignoring the fact that the companies are functionally different: a) Goldmine Advertising Limited b) Pressman Advertising Limited c) Ugam Solutions Private Limited d) Majestic Research Service and Solutions Limited e) Killick Agencies & Marketing Limited f) Scarecrow Communications Limited 13. Without prejudice, the learned TPO/ AO has erred, in law and in fact, by selecting certain companies as comparable companies ignoring the fact that the companies are rejected on RPT filter: a) Majestic Research Service and Solutions Limited 14. Without prejudice, the learned TPO/ AO has erred, in law and on facts, in erroneously selecting the companies ....
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....,07,776. The DRP where the Hon'ble DRP upheld the position taken by the AO. 8. The ld. AR submitted at the outset that similar disallowance of depreciation on assets given under finance lease was made by the CIT for AY 2008-09 in assessee's own case, by initiating proceedings under section 263 of the Act. The Tribunal quashed the proceedings under section 263 on the ground that the AO had applied his mind and had examined the issue on allowability of depreciation on assets given on financial lease in detail. Aggrieved, the department had filed appeal before Hon'ble Karnataka High Court in ITA No.29/2019 dated 18 June 2021, which has upheld the order of ITAT in relation to quashing 263 proceedings initiated by learned CIT. While doing so, the Hon'ble High Court not only held that action of CIT was not proper but also examined the matter on the merits including examining terms of financial lease agreements and comparing it lease agreements in case of ICDS etc. and held that even on the facts and merits of the case, Assessee is entitled for depreciation on financial lease assets. After examining the terms of financial lease with facts in case of Apex court in case of IC....
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....e for fresh adjudication with a direction to the assessee to produce the copies of the lease agreements called for by the AO. Also, the Tribunal had directed that if the terms & conditions mentioned in these agreements are similar to the terms and conditions considered by the Hon'ble Supreme Court in the case of ICDS Ltd. (supra) and if there are no material variations in the contracts, then depreciation has to be granted to the assessee as claimed. 10. Pursuant to the order of the Tribunal case for AY 2011-12 and AY 2013-14, the AO has passed the order giving effect for AY 2011-12 recently on September 13, 2021 wherein the AO has examined the agreements signed by assessee with the lessees and recorded the findings that the facts in assessee's case are also similar to facts in case of ICDS Ltd (supra). The AO has held that the assessee has also sold the assets given under finance lease arrangement to the Lessees at the end of the lease term which reinforces that the ownership of the assets under finance lease arrangement lies with the Lessor, i.e., the assessee and hence, assessee only is eligible to claim depreciation on assets given under finance lease arrangement. 11. ....
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....e terms of the agreement considered by the Hon'ble Supreme Court in the case of ICDS Ltd. (supra) is correct or not. 8. In view of the above discussion, we set aside the issue to the file of the AO for fresh adjudication in accordance with law. The assessee is directed to produce copies of those agreements which the AO may call for. The AO shall examine these agreements and if the terms & conditions mentioned in these agreements are similar to the terms and conditions mentioned in the agreements considered by the Hon'ble Supreme Court in the case of ICDS Ltd. (supra) and if there are no material variations in the contracts, then depreciation has to be granted to the assessee as claimed. With these observations, we set aside this issue to the file of AO for fresh adjudication in accordance with the law." 14. Respectfully following the above order of the Tribunal, we are inclined to remit the issue to the file of Assessing Officer for fresh decision with similar directions. 15. Ground No.3 by the assessee is with regard to not allowing set-off of brought forward depreciation loss. In the return of income, the assessee had claimed set off of brought forward depreciation....
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.... the claim of the TPO that the impugned specified domestic transaction should be separately benchmarked is erroneous and unjustified. In this regard, reliance is also placed on the following decision wherein bundled transaction approach has being upheld:- * Sony Ericsson Mobile Communications India Private Limited (231 Taxman 113) (Delhi HC) * Delhi High Court decision in case of Maruti Suzuki India Limited, 129 DTR 25 (Del) * Sony Mobile Communications (ITA No 6410/Del/2012) affirmed by Delhi High Court in (2019) 104 CCH 0355 Del HC * Audco India Ltd (264 Taxman 237) (Bombay High Court) * Bangalore Tribunal in the case of M/s. Forsoc Chemicals India Private Limited vs. ACTT [IT(TP)A No.1813/Bang/2013) * Bangalore Tribunal in case of M/s Parametrics Technology Private Limited Vs DCIT, ITA No.359(Bang)/2016 19. Accordingly, it was submitted that as the assessee's primary transaction of import of equipment from AE (Appellant's margin 5.90%) has been accepted at arm's length after considering the payment of administrative and marketing support services as part of operating cost, no separate adjustment is warranted in res....