TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 2035
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....orted the following International Transactions (IT) in its report u/s 92E: Nature of transaction Amount Method Provision of IT Enabled Services 80,377,608 TNMM Reimbursement of expenses 4,798,726 Total 85,176,334 Therefore, the AO referred the matter to the Transfer Pricing Officer [TPO] for the purpose of benchmarking the above International Transactions. 3. The, TPO, after going through the Transfer Pricing (TP) report submitted by the assessee- company noticed that the Assessee had outstanding debts from its Associated Enterprises exceeding 6 months for a sum of Rs.16,37,14,145/-. Therefore the TPO opined that debts outstanding for more than 6 months par take character of the loan. Therefore non-charging of interest requires ALP adjustment and applying the yield rate on B rate Bonds @ 13.46% on the outstanding debts exceeding 6 months suggested TP adjustment of under: Arms Length Interest Rate 13.46% p.a. Arms Length Price @ 13.46% p.a. on the outstanding receivables exceeding six months of Rs. 29,68,19,406/- Rs.2,23,46,980/- TP Adjustment: Arms Length Price of Extended Payment Terms Rs. 2,23,46,980/- Price Charged Rs. Nil Adjustment u/s. 92....
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....he case and in law, the AO erred in invoking the provisions of Chapter X of the Act, in relation to the transactions entered into by the STPI units, without appreciating that the income of such STPI units was exempt under section 10A of the Act, and therefore, there could not have been any erosion of tax revenue from India. Further, the DRP erred in upholding such an action of the AO. 4. That on the facts and circumstances of the case and in law, AO / DRP erred in not appreciating that the reference made by the AO to the TPO for determination of arm's length price was void ab-initio and bad in law as the AO failed to provide copy of approval granted by the Commissioner of Income-tax and affording any opportunity of being heard to the Appellant, in violation of the principles of natural justice. 5. That the AO / DRP / Transfer Pricing Officer ("TPO") erred on facts and circumstances of the case and in law in treating trade receivables amounting to INR 16,73,14,145, outstanding from the Associated Enterprises ("AE"), as an international transaction and re-characterizing the same as loan. 6. That on the facts and circumstances of the case and in law, the AO / DRP / TPO erred....
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.... undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794 dated 9.8.2000 which states in paragraph 15.6 that, "The export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision." 17. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No. 794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and ca....
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.......... (b)............................... (c) capital financing, including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business; ........................................................................................." This Explanation was inserted by the Finance Act 2012 needless to say that the purpose of Explanation in a statute is to clarify or explain or settle any doubt or ambiguity and controversy. This Explanation to section 92B of the Act by the Finance Act 2012 though not in terms retrospective, serves as a Parliamentary exposition of the meaning of the word 'International Transaction' as used in un-amended section. It is trite law that Explanation, though not retrospective, was used as a Parliamentary exposition of its intent contained in the un-amended section (see Manickam and Co. Vs. State of Tamil Nadu (1977) 39 STC 12; AIR 1977 SC 519). This position was followed subsequently by the Hon'ble Apex Court in the case of CIT vs. P. Doraiswamy Chetty (183 ITR 559). The rele....
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....s a parliamentary exposition of the former (see Craies on Statute Law, 7th Edn., pp. 147 and 148). This principle was recently applied by the Supreme Court in construing section 15(6) of the Central Sales Tax Act, as it stood before its amendment by Act No. 61 of 1972, and the amendment introduced by this Amending Act, though not retrospective, was used as a parliamentary exposition of its intent contained in the unamended section [see Manickam & Co. v. State of Tamil Nadu AIR 1977 SC 518]. The Explanation added in section 64 by the Finance Act, 1979, though not in terms retrospective serves as a parliamentary exposition of the meaning of the word 'income' as used in the unamended section, for, that word, in the context of section 64, was really ambiguous and had given rise to diverse meanings." (p. 355) This view of the Madhya Pradesh High Court has been referred to with approval by this Court in J.H. Gotla's case (supra). 8. This construction of the provision also commended itself to the Direct Tax Law Committee, 1978, which, in its final report, said: "The provisions for aggregating income of the spouse under clause (i) of section 64(1) has led to a dispute i....