TaxTMI 
TaxTMI 
2024 (4) TMI 1242
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....dia. The Assessee entered into a 'International Transportation Services Agreement" with UPS Worldwide Forwarding Inc. (UPS WWF). The Assessee commenced its operations of outbound business in January, 2001 and inbound business in April, 2001. 3. During the period relevant to Assessment Year under appeal, the Assessee entered into international transactions with its Associated enterprises (AEs). The TPO vide order dated 9.1.2019 rejected Assessee's benchmarking of international transactions and re-computed arms length price of the transactions and, thus, made certain adjustments. Against the adjustments made, the Assessee filed objections before the DRP. Since, the Assessee failed to get desired relief on the adjustments made by the TPO, from the Dispute Resolution Panel (DRP), hence, the present appeal before the Tribunal. Apart from the adjustments made by the TPO, there were certain corporate additions made by the Assessing Officer in the draft assessment dated 26.3.2014. The gist of grounds raised in the appeal by the Assessee is as under: 1. Transfer Pricing adjustment in respect of Technical know-how fees of Rs. 6,65,80,278/- paid by Appellant to its Associated Enterprise (&....
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....dia for employment. The details of his passport and visa are at pages 849 to 850 of the paper book. A perusal of the same would show that his visa is Type E, i.e., for employment. He was 'Country Business Development Manager'. The ld. Counsel for the Assessee asserted that the documents on record clearly show that both the aforesaid foreign nationals were in India for business purpose. To further substantiate that the aforementioned foreign nationals were in India for business purpose/employment, the Assessee filed additional evidence, i.e., Form No.16 of Mr. Brian Frank, etc. The ld. Counsel submitted that in Assessment Year 2012-23 and 2013-14, similar expenditure were allowed by the TPO. 4.2 In respect of ground no.3 of appeal, the ld. counsel submits that the assessee has assailed rejection of some of the comparables by the TPO viz., First Flight Courier Ltd., Patel Integrated Logistics Ltd.(segmental), On Dot Courier & Cargo Ltd., and AFL Pvt. Ltd. (Segmental). He submitted that in appeal by the Revenue ground no. 1 & 2 of appeal are against the findings of DRP in holding forex gain as operational income and income arising on account of excess provisions written back, respect....
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....ct to adjustment on account of technical know-how fees paid by the Assessee to AE in pursuance to Technical License Agreement. We find that similar addition in respect of technical know-how fees was made in Assessment Year 2013-14. The Co-ordinate Bench in Assessee's appeal in ITA No.6318/Mum/2017 (supra) after recording the facts and considering Technical License Agreement held as under: "6. We have heard rival submissions. We find that the Id. DRP had merely followed the decision taken by them in A. Y (2010 - 11) and 2012-13 in assessee's own case. Against the said orders of the Id. DRP, assessee had preferred appeals before us and the same are pending to be heard. We find that the appeal for A.Y.2013-14 alone was taken up for hearing as it was a Stay granted matter, on out of turn basis. Hence, this issue though recurring in nature, needs to be adjudicated for A.Y.2013-14. We find that the preliminary issue that is to be decided in the instant case is whether the Id. TPO was justified in determining the ALP of technical knowhow fees at Rs. Nil without following the benchmarking analysis provided in any one of the prescribed methods as provided in the statute read with rele....
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....iate from the restrictions / conditions imposed under the statute. The Hon'ble Jurisdictional High Court in CIT v/s Johnson & Johnson Ltd., ITA No.1030/2014, dated 7th March 2017, while dealing with identical issue of determination of arm's length price of royalty by resorting to estimation by the Ld TPO had held as under:- "(d) We find that the impugned order of the Tribunal upholding the order of the CIT(A) in the present facts cannot be found fault with. The TPO is mandated by law to determine the ALP by following one of the methods prescribed in section 92C of the Act read with Rule 10B of the Income Tax Rules. However, the aforesaid exercise of determining the ALP in respect of the royalty payable for technical knowhow has not been carried out as required under the Act. Further, as held by the CIT(A) and upheld by the impugned order of the Tribunal, the TPO has given no reasons justifying the technical know how royalty paid by the Assessing Officer to its Associated Enterprise being restricted to 1% instead of 2%, as claimed by the respondent assessee. This determination of ALP of technical know how royalty by the TPO was ad-hoc and arbitrary as held by the CIT(A) an....
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....the aforesaid persons had visited India on business visa/employment visa. The Assessee has also placed on record Form 16 of Mr. Brian Frank indicating payments made from 1.6.2009 to 31.3.2010 that is relevant to the Assessment Year 2010-11. The Assessee has furnished additional evidences to substantiate that the aforesaid person had infact worked for the Assessee in India and the payments/reimbursements are in connection with their services rendered in India. The additional evidences filed by Assessee vide application dated 10.4.2023 are taken on record. Taking into consideration the fact, that the Assessee had furnished visa/passport details of both the aforesaid employees which were not considered by the TPO and additional evidence placed on record before the Tribunal, we deem it appropriate to restore this issue to the file of Assessing Officer/TPO for deciding the issue afresh after considering the documents, in accordance with law. Thus ground no.2 is allowed for statistical purposes. 9. The ground no.3 of appeal is inter-related to ground no.1 & 2 in the appeal of the Revenue. Hence, the aforesaid ground will be taken up alongwith the appeal of Revenue. 10. Ground No.4 of a....
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....scussion, we restore the matter back to the file of AO to verify as to whether the Titus has paid tax on the impugned payments by incorporating the same in their respective income. If the AO finds that the Titus has already paid tax by including such payments in its income, no further tax can be collected from assessee which amounts to double taxation and no disallowance can be made in the hands of He assessee u/s. 40(a)(in). We direct accordingly." The Revenue has failed to rebut aforesaid findings of the Coordinate Bench or to show any material distinguishing the facts in impugned Assessment Year. Hence, following the decision of Co-ordinate Bench, ground no.4 of appeal is allowed for statistical purpose, for parity of reasons. 11. The ground no.5 of appeal is with regard to disallowance of depreciation in respect of fixed assets purchased from UPF WWF in the period relevant to Assessment Year 2008-09. We find that in Assessment Year 2008-09, the Coordinate Bench in ITA No.3311/Mum/2013 (supra) allowed Assessee's claim of depreciation by observing as under: "17. With regard to disallowance of depreciation on assets imported by assessee in the form of computers, scanners, prin....
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....PO/AO to delete the TP adjustment made in respect of the two reimbursement amount on account of (a) Stationery and Printing Rs. 70,70,858/- and (b) Scanning and Digital of Customs related documents Rs. 9,37,058/ without appreciating that the DRP had admitted and relied upon fresh evidences which were submitted only during the course of DRP proceedings, without providing an opportunity to the Assessing Officer to examine them and to offer comments thereon? 4. Whether on the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in directing the assessing officer to delete the addition of Rs. 61,27,515/- made by the assessing officer u / s 40(a)(i) of the IT Act, without appreciating the fact that the assessee and M / s RMS were in contractual relationship? 5. Whether on the facts and in the circumstances of the case and in law, the Hon'ble DRP has erred in holding that the payment made to M / s RMS as professional charges cannot be taxable in India due to its non-resident status without appreciating the fact that M / s RMS was appointed as a collection vendor? 14. The learned Departmental Representative submits that the DRP has erred in holding for....
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....upported the findings of DRP on this issue. 19. We find that the DRP has allowed excess provisions written back by observing as under: "4. With reference to the next item of excess provisions written back of Rs. 51,74,733 that is in dispute, the TPO had disallowed it on the ground that it did not relate to the period under consideration. However, here again it is seen that the normal accounting practice is that at the time of closing of the books certain expenses are booked as provisions on an estimated basis and once the relatable expenses get crystallized, then the appropriate excess provision is written back or the shortages booked, as the case may be. That being a regular accounting system not just the assessee but the comparables as well, would be passing similar entries in their books. As long as these provisions were on revenue account they would remain operational in nature and the TPO is found to be not justified in excluding the same while computing the net profit margin of the assessee. The AL / MNL are accordingly directed not to exclude excess provisions written back in the benchmarking exercise." 20. In the case of PCIT Vs. Petro Araldite (P) Ltd. (supra) one of t....
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....enue, hence dismissed. 21. In ground no.3 of the appeal, the Revenue has assailed the TP adjustment deleted by the DRP in respect to reimbursement of a) Stationery and Printing Rs. 70,70,858/-; and b) Scanning and Digital Storage of customs related documents Rs. 9,37,058/-. The ld. DR submits that the DRP decided the issue on the basis of additional evidences filed by the Assessee. 22. Per contra, the ld. Counsel for the Assessee pointed that the Department has made factually incorrect statement in ground no.3 of appeal. No additional evidences were filed by the Assessee before the DRP. The DRP has decided the issue considering the documents already on record. 23. We have heard the submissions made by both the sides. The contention of Assessee that no additional evidences were filed by the Assessee before the DRP, whereas, Department contends that DRP has deleted the addition on the basis of fresh evidences. We have examined the directions of the DRP. The issue is discussed in para 12 of the directions. From perusal of findings of the DRP it does not emanate that any fresh evidence was considered by the DRP to decide the issue in hand. The DRP ostensibly decided the issue on the....
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....come from the services rendered overseas would be taxable in India. Once the receipts are not chargeable to tax in India, there could be no liability on the Assessee to withhold tax on the payment made to M/s. RMS through its AE. We find that identical issue was considered by the Co-ordinate Bench in Assessment Year 2008-09 (supra). The Co-ordinate Bench after examining the facts of the case and various decisions held that no disallowance u/s. 40(a)(i) of the Act is warranted in respect of payments made to M/s. RMS. Extract of the findings of the Tribunal on this issue are as under: "12. We have considered rival contentions and gone through the orders of the lower authorities. From the record, we found that invoices issued by UPSWWF on assessee are matched back to back with the invoices raised by the RMS. It was a clear case of reimbursement without any profit element. We also found that there was mere provision of services which is not enough for bringing to same in the tax net. The services should also make available technical knowledge skill, experience, know or process. If the assessee would have made direct payments to RMS for debtors collection services it does not fall wit....