TaxTMI 
TaxTMI 
2025 (10) TMI 476
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.... filed its return of income on 26.09.2013 declaring a total loss of Rs. 8,900/-. Notice under section 143(2) dated 10.09.2014 was issued and duly served. According to the Assessing Officer, the assessee did not furnish the accountant's report in Form 3CEB and stated that it had not undertaken any international transaction as defined in section 92B. A show cause letter dated 25.02.2016 was then issued. The assessee filed its written objections on 07.03.2016. The Assessing Officer has noted that the objections were disposed of by a speaking order dated 15.03.2016. Thereafter, notices under section 142(1) were issued from time to time and various details were furnished on different dates. 2.2 The case was referred to the Transfer Pricing Officer [hereinafter referred to as "TPO"] for determination of the arm's length price of the international transactions. The TPO, by order under section 92CA(3) dated 25.10.2016, determined an upward adjustment in the arm's length price. In the narration of facts the amount is stated at Rs. 9,09,30,135/-. In the computation portion extracted in the assessment order, the upward adjustment figure appears as Rs. 9,09,30,132/-. Based on the TPO's orde....
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.... of the Appellant while the TPO's authorization u/s 92CA is restricted to determination of arm's length price of the international transactions referred to him by the AO. The sole authority to determine profits attributable to PE, if any, rests with the AO and the TPO exceeded his jurisdiction in carrying out exercise of attribution of profit to Indian PE. Transfer Pricing adjustment of Rs. 9,09,30,135 made by the TPO essentially represents additional profit attributable to Indian PE and therefore, the TPO and consequently the AO have clearly erred in making such adjustment. It be so held now. 3. The TPO, the Learned Dispute Resolution Panel ("the DRP") and consequently the AO have erred in facts as well as in law by confirming and making addition of Rs. 9,09,30,135 in contravention of the provisions of Section 92CA in respect of the onshore contracts as well as the offshore contracts. 4. Without prejudice to the non-applicability of provisions of Chapter X of the Act, the TPO, the DRP and consequently the AO erred in facts and in law in holding that the PE of Appellant in India has not been adequately remunerated for the work performed by it in respect of....
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....14 are squarely covered by the decision of the Coordinate Division Bench (DB) in assessee's own case for the immediately preceding Assessment Year 2012-13. It was pointed out that the Hon'ble Special Bench, vide its order dated 11th November 2024, and the subsequent order of the Division Bench dated 22nd July 2025, has already adjudicated the grounds identical to those raised in the present appeal. The learned AR submitted that the grounds raised for AY 2013-14 are pari materia with those adjudicated in AY 2012-13. 4. The learned Departmental Representative fairly agreed that the issues in dispute are identical to those decided by the Special Bench and the Division Bench (DB) in the assessee's own case for AY 2012-13. The DR did not advance any independent arguments to distinguish the present year from the earlier year or to take a contrary position. 5. We have carefully considered the rival submissions and perused the record. The issues raised in the present appeal by the assessee for Assessment Year 2013-14 are materially identical to those adjudicated by the Co-ordinate DB in assessee's own case for Assessment Year 2012-13 in ITA No. 581/Ahd/2017, order dated 22.07.2025, r....
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.... v CIT (1979) 116 ITR 425 (Cal) & Sumitomo Mitsui Banking Corporation (2012) 19 taxmann.com 364 (Mum SB) are not applicable in the context of transfer pricing. 5.1.5 The Special Bench further clarified that even where the HO-PE arrangement yields a loss, it falls within the ambit of transfer pricing provisions: 11.4 Further, the word 'transaction' in the context of transfer pricing has to be understood as per the clause (v) of section 92F, which is wider than the normal understanding of word 'transaction'. Clause (v) of section 92F defines 'transaction' as below: (v) "transaction" includes an arrangement, understanding or action in concert, - (A) whether or not such arrangement, understanding or action is formal or in writing; or (B) whether or not such arrangement, understanding or action to intended to be enforceable by legal proceeding. 11.5 Thus, transaction includes arrangement, understanding or action in concert. The arrangement or understanding between two enterprises may also give rise to income or loss and it may be subject matter of transfer pricing. In the instant case, the arrangement between the HO....
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....osses on onshore activities; that both major activities, i.e., transportation and installation/commissioning, were further sub-contracted by the Head Office to Indian contractors; and that the Project Office was not adequately compensated for the activities undertaken. The DB also noted several discrepancies in revenue recognition, lack of one-to-one correspondence between revenue and expenses, unexplained losses, and differences in scope and rates between the Head Office contract with PGCIL and the subcontract agreements with Indian contractors. In rejecting the assessee's plea for adoption of CUP, the DB categorically held as under: 42. In the light of the same, when considering the original onshore agreement entered into by the head office with PGCIL, it was found that the assessee was not adequately compensated for the activities carried out, there is no question at all for treating that agreement as a comparable for applying CUP method for determining ALP for the transaction. The onshore agreement surely was not at arm's length since no independent entity would agree to carry out work at losses/without being adequately compensated for it. The argument of the Ld. Couns....
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....IL as per the original bid document. Such guarantee related functions were to be performed by the Project Office in India. The TBEA China was also asked to establish a repair and maintenance facility in India, against which an MoU was signed by M/s TBEA with M/s Vijay Electricals Ltd (VEL), Hyderabad for setting up repair and maintenance facilities. The minutes of post bid discussion dated 03.02.10 provided for training of staff from VEL in China as well as in India. The minutes also provided for manufacturing of all major components like winding etc at TBEA China with minor jobs to be attended at VEL under TBEA supervision to take care of damages that may occur during transportation. The release of payment towards offshore supply contract was also made contingent upon the satisfactory performance of the equipment supplied and establishment of repair and maintenance facility. To that extent, the activities of the PE/Project Office fell in the domain of After Sales support and Provision of Warranty Services for the Goods sold under 'Off-shore supply' agreement. Such portion of income from Offshore supply contract which is attributable to 'After Sales support and Provision of Warrant....