TaxTMI 
TaxTMI 
2023 (1) TMI 1501
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....hallenging the transfer pricing adjustment made in respect of payment of technical consultancy fee in the sum of Rs.2,22,51,661/- by the assessee to its Associated Enterprise (AE). 4.1. We have heard rival submissions and perused the materials available on record. The assessee is incorporated on 18/04/2005 and is subsidiary of M/s. Merck Holding GmbH, Germany which in turn was wholly owned subsidiary of M/s. Merck KGaA, Germany (MKGaA). The assessee is engaged in trading and manufacturing of chemical and related products extensively used in quality control, research and development, pathological laboratories, testing of water, food, beverages etc. The assessee had entered into international transaction for various Associated Enterprises which are listed in pages 2 & 3 of the order of the ld. TPO u/s. 92CA(3) of the Act dated 11/01/2016. The disputed issue to be decided is with regard to international transaction representing payment of technical consultancy fee of Rs.2,22,51,663/-. During the year, the assessee company has made payment of technical consultancy fee of Rs.2,22,51,663/- to its AE namely MKGaA. This transaction was benchmarked on aggregate basis under trading segmen....
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....e making such heavy payments over the years, the benefit derived by on-call arrangements and that the assessee other than providing agreement, emails and the description of services discussed above has not provided any evidence for such services have been rendered. The ld. TPO also observed that the documents submitted by the assessee could not demonstrate that any tangible and direct benefit was derived by the assessee by making payment of technical consultancy fee to its AE. 4.4. The ld. TPO also observed that benchmarking done by the assessee using TNMM was to be rejected and since no independent comparable enterprises was provided to show the comparable circumstances to incur such stand by charges and justify the ALP, the ld. TPO by applying the Comparable Uncontrolled Price Method (CUP) determined the ALP of this international transaction at Rs. 'Nil'. This action of the ld. TPO was upheld by the ld. DRP. 4.5. We find that assessee has been making this payment of technical consultancy fee to its AE over the years and the very same issue was subject matter of adjudication by this Tribunal in assessee's own case in the A.Y.2009-10 in ITA No. 1947/Mum/2014 dated 11/11/2019 ....
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.... It is for the availability of the assistance in all twelve areas that the consideration was paid. Thus, no adjustment was required. It further held that the entire Transfer Price Adjustment was done by the Revenue without having been applied any of the methods prescribed under Section 92C of the Act to determine at the ALP. Consequently, the determination of ALP done by the Assessing Officer/TPO could not be justified. It further recorded the fact that no transfer pricing exercise was done by the Assessing Officer/TPO to determine the value of the services received by the Respondent-Assessee in respect of the three services which it had availed of from its AE before holding that the ALP in this case is Rs. 40 lakhs. This was became no exercise to bench mark it with comparable cases was done. Therefore, the consideration payable for the services availed of by the Respondent Assessee to determine the ALP was not carried out. In the above view, the Tribunal allowed Respondent-Assessee's appeal on the above issue. (c) The grievance of the Revenue before us is that services only in three areas had been availed of by the Respondent-Assessee from its AE out of the twelve are....
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....e herein. Accordingly, we direct the ld. TPO to delete the addition made on account of TP adjustment in respect of payment of consultancy fee of Rs.2,22,51,663/-. Accordingly, the ground No.2.5 raised by the assessee is allowed. 5. The ground No.3 raised by the assessee is challenging disallowance of depreciation on intangible assets of Rs.3,89,90,479/-. 5.1. We have heard rival submissions and perused the materials available on record. Since this is a recurring issue, we find that this issue was subject matter of adjudication by this Tribunal in A.Y.2007-08 and 2008-09 in ITA No.3943 & 3944/Mum/2013 respectively dated 25/01/2017 wherein it was held as under:- "2.3.We have heard the rival submissions and perused the material on record. We find that the assessee had purchased A&R business from its sister concern for Rs.81.67 crores, that it had merged the assets and liabilities of the erstwhile business with the newly acquired assets and liabilities, that it had shown an addition to the block of intangible assets amounting to Rs. 65.50 crores, that it had also shown addition of Rs.3.18 crores with regard to other fixed assets, that it had obtained a valuation report o....
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....reports from two valuers for transfer of the said assets. Ld. AR submitted that the department has no right to re-write the agreement and to consider that the consideration of Rs.65,50,00,000/- received by the assessee is on account of non- compete fee. XXXXX Ld.AR submitted that the consideration of Rs.65,50,00,000/- received by the assessee is on account of transfer of intangible assets. Therefore it is a capital receipts which cannot be taxed u/s 28 of the Act. 19. Ld. DR referred the valuation report and submitted that in the said valuation report and also in the sale agreement dated 17.4.2006, there is no reference of the valuation report on the basis of which the assessee has stated to have transferred intangibles assets to MSPL for Rs.65,50,00,000//- . He submitted that there is no document placed on record that the assessee has transferred any technical know-how. XXXXX 20.We have carefully considered the orders of the AO/DRP along with the submissions of ld. Representatives of the parties. We have also carefully considered relevant Articles of the agreement for sale entered into between the assessee and MSPL and also decisions cited be....
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....No.2) the assessee has given individual value of the assets and whereas in the case of "slum sell", as per section 2(42C), the term "slump sale" has been defined as the transfer of one or more undertakings as a result of sale for a lumpsum consideration without valuation being assigned to the individual asset and liability of such sales. Considering the said facts in the light of explanation, we are of the considered view that the condition as provided in the case of "slum sale" for considering the consideration received on sale of an assets is not satisfied to consider it as a capital gain u/s 50B of the Act. Further, we also find merits in the contention of ld. DR that no basis of break up of the capital asset has been stated in the agreement and/or in the valuation report on which the assessee has placed reliance before us. Besides, we also observe that Article 9.2 of the sale agreement provides that the assessee undertakes for a period of 7 years after the execution of this agreement not to engage in/or carry out any business anywhere, which would compete with A&R Business except to the extent permitted under this agreement. On consideration of Article 9.2 of the sale agreement....
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.... interest of justice matter should be restored back to the file of the FAA for fresh adjudication. He is directed to decide the issue 3943-44/M/13(07-08&08- 09) Merck Specialities afresh after affording a reasonable opportunity of hearing to the assessee. First ground of appeal is decided in favour of the assessee, in part. 5.2. This issue is recurring as stated supra and the effect of allowing depreciation for the year under consideration would be dependent on the ld. AO deciding the issue of grant of depreciation on intangible assets in earlier years. In these circumstances, it would be appropriate to restore the matter to the file of the ld. AO for giving consequential effect on the allowability of depreciation for the year under consideration. Accordingly, the ground No.3 is restored to the file of the ld. AO and allowed for statistical purposes. 6. The ground No.4 raised by the assessee is challenging the disallowance of depreciation on goodwill of Rs.4,12,40,842/-. 6.1. We have heard rival submissions and perused the materials available on record. This issue is also a recurring issue and the same was subject matter of adjudication by this Tribunal in assessee's own c....
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.... addition of Hon'ble Supreme Court in CIT v. Smifs Securities Ltd., 348 ITR 302 (SC). During the course of hearing, assessee placed on record audited accounts of assessee as well as order of Hon'ble jurisdictional High Court approving the scheme of amalgamation. Further, reference was also made to balance sheet of amalgamating subsidiary company as well as other documents forming part of the paper book in support of its claim. From the record it is evident that none of these documents were examined by the lower authorities and assessee's claim was rejected at the threshold by placing reliance upon Hon'ble Supreme Court decision in Goetze (India) Pvt. Ltd. (supra). Vide our interim order dated 02/06/2022, remand report of the AO was sought in respect of the documents on which reliance was placed by the assessee in support of its claim of depreciation on goodwill. Further, the assessee was also directed to appear before the AO along with all the documents in support of its claim. The AO vide its remand report dated 07/07/2022, inter-alia, raised doubts on the valuation report submitted by the assessee. The AO also agreed that the opportunity is being given in remand proceedings to ve....
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....Techno-Shares and Stocks Ltd vs CIT, [2010] 193 Taxmann 248 (SC) and submitted that assessee has to establish that goodwill as licensed/franchise. We find that in the aforesaid decision the Hon'ble Supreme Court was dealing with the issue of depreciation on BSE membership card under section 32(1)(ii) of the Act. Therefore, same is not applicable to the facts of the present case. Before concluding, it is relevant to note that the Hon'ble Supreme Court in Smifs Securities Ltd. (supra) has held that goodwill will fall under the expression 'or any other business or commercial rights of similar nature' and, hence, qualifies for depreciation under section 32(1) of the Act. In the present case, the AO as well as learned DRP did not entertain the claim of the assessee in view of decision of Hon'ble Supreme Court in Goetze (India) Ltd. (supra), however, it is now well settled that there is no bar on the appellate authority to entertain a fresh claim of the assessee, if the relevant fact for deciding such issue are available on record. Further, it is pertinent to note that on one hand in the remand proceedings, the AO for the first time raised doubts about the valuation report, howev....