TaxTMI 
TaxTMI 
2026 (6) TMI 670
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....income after adjusting brought forward losses the extent of Rs. 1,17,27,45,050/-. The case was selected for scrutiny. The notice u/s 143(2) of the Act dated 20.08.2010 of the Act was issued. Questionnaire dated 01.02.2011 along with notice u/s 142(1) of the Act was issued. Shri Manish Bansal CA/ARs of the assessee attended proceedings and filed the submissions. The assessee, M/s. Cargill India Private Limited, a company incorporated under the Companies Act, 1956, is a wholly owned Indian Subsidiary of Cargill Mauritius Limited. The assessee is engaged in the business of import, export and domestic trading in edible oils, fertilizers, grains, oil seeds and other food products/ processed food and in the business of processing crude oil. 3. As per the form No. 3CEB filed along with return the assessee had international transactions with associated enterprises/concerns. In order to determine Arm's Length Price ("ALP") in relation to international transactions the case was transferred to Transfer Pricing Officer ("TPO") after obtaining the prior approval of CIT, Delhi-1, New Delhi. Ld. TPO/ Additional CIT, Transfer Pricing-1(1), Delhi passed order u/s 92CA(3) dated 29.01.2013 making ....
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.... clause (a) to (d) of Section 92C (3) of the Act have been satisfied before disregarding the arm's length price determined by the Appellant and proceeding to determine the arm's length price himself. 3 The Hon'ble CIT(A) has grossly erred in upholding the additions made by the Hon'ble AO/TPO in respect of certain intra group services received by the appellant. 3.1 The Hon'ble CIT (A) has grossly erred in contending that no proper evidence was submitted by the Appellant to prove that certain intra group services were actually received from the associated enterprises (AEs), undermining the reasonableness of the evidence submitted by the Appellant. 3.2 The Hon'ble CIT (A) by upholding the addition made by the Hon'ble AO/TPO, has grossly erred in exceeding his jurisdictional reach by challenging the commercial expediency and business decisions of the Appellant and by expecting the Appellant to demonstrate any tangible/quantitative benefit from the receipt of such services. 3.3 The Hon'ble CIT(A) has failed to take cognizance of the fact that certain intra group services availed by the appellant from its AEs have benefi....
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.... time of hearing." 5.2 In ITA No. 4033/Del/2019, the Revenue raised following grounds: "1. Whether the Ld. CIT(A) has erred on facts and in law in not upholding the CUP method applied by the AO/TPO as no uncontrolled entity would pay any amount for services which do not tantamount to intra group services with demonstrable details and benefits? 2. Whether the Ld. CIT(A) has erred on facts and in law in not upholding the adjustment on the issue of HR Services and partially upholding on the issue of Legal Services and Taxation Services without appreciating the fact that the evidences filed by the assessee are inadequate and do not establish the purpose of availing of Intra Group services and also most of the services are at best duplication of assessee's efforts? 3. Whether the Ld. CIT(A) has erred on facts and in law in allowing the unabsorbed depreciation existing as on 1st April 2002 to be carried forward and set off beyond 8 years. 4. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 6. Ld. Authorized Representative....
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....ustments made to losses and depreciation should be ignored for the purposes of section 115JB. Following are the adjustments:- Date Nature of arrangement Set off against Capital items 31.03.2004 Scheme of Capital reduction vide Delhi High Court order dated 03.02.2005 r/w amended order dated 15.03.2005 [para 1-6 of the HC order] Share capital & Securities Premium set off against INR 58,45,12,161/- to Nil [refer Schedule L to the P&L account, and schedule S para 25)) A copy of audited financial statements of FY 2004-05 is exhibited at page 65 of paper-book) 31.03.2007 Scheme of arrangement vide Delhi High Court order dated 13 Aug 2008 under Section 391 of CA, 1956 [para 7-64 of the HC order] (clause 16.3 of the scheme read with HC order dated 13.08.2008 Share premium account & Equity Share capital account against debit balance of cash loss of 337 crores. (270 for share premium and 66 for share capital) (schedule 23(f) of FY 06-07 financials) (A copy of audited financial statement of FY 2007-08 is exhibited at page 91 of paper book For Schedule 23(f), please refer page 120 of corporate tax paper-book). 01.04.2007 Appointed date of the scheme of ar....
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.... 96,57,505 1999-00 Unabsorbed depreciation 2,36,44,717 2000-01 Unabsorbed depreciation 15,39,277 Amount set off against income from other sources [A] 3,48,41,499 2003-04 Brought forward business loss 17,63,23,480 2004-05 Brought forward business loss 60,28,71,237 2006-07 Brought forward business loss 35,87,08,834 Amount set off against losses [B] 1,13,79,03,551 Total amount [A+B] 1,17,27,45,050 16. In the instant case, the AO has allowed the set off the business loss of AY 2003- 04, AY 2005-06 and AY 2006-07 against the Income under head of Profit and Gains from Business and Profession [Component B in the above table amounting to INR 113 crores). 17. However, AO disallowed the set off of income from other sources against unabsorbed depreciation pertaining to AY 1998-99, 1999-00, and 2000-01. CIT(A) findings (at page 20 @para 7.11 of the appeal set) 18. CIT(A) decided in favour of the assessee by considering the unabsorbed depreciation of AY 1997-08 to AY 2000-01 as current depreciation as they were not set off till FY 2002-03. CIT(A) contended that the....
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.... that no comparable entity would pay for such services. 13. A Co-ordinate Bench in ITA No. 3060/Del/2015 titled as M/s. Cargill India Private Limited vs. DCIT for Assessment year 2008-09 in order dated 18.05.2020 in para No. 9 to 20 held as under: 9. Undisputedly, during the course of first appellate proceedings, the taxpayer has filed additional evidence qua intra group services received from its AEs qua which remand report was called. In the remand report, ld. TPO divided the services received by the taxpayer as under ;- S. No. Services 1. Administrative Services 2. Corporate IT & other service 3. Treasury Services 4. Admin & Tech training 5. Brokerage Services 6. Other Services 7. Software Sharing 10. A remand report itself shows that plethora of evidence has been brought on record by the taxpayer to prove the receipt of the intra group services received from the AE but TPO, without making any cogent comment on the evidences, dismissed the same by mentioning that there is no clearly defined evidence in respect of these evidences. 11. Ld. CIT (A) upheld the view taken by the AO that the services are par....
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....es", the taxpayer was also charged for one-off services provided by Cargill BV, Cargill BA-Cargill PLC Cargill SRL and Cargill Agri Purina Inc. for Rs. 86,40,242/-. Ld. TPO determined the ALP of other services at nil by observing that from the details of evidence submitted by the taxpayer, most of it is irrelevant since it consists of invoices and simply filing of invoices cannot be considered services rendered. Ld. CIT (A) also upheld the findings returned by the TPO by holding that other services are in the nature of duplicative/incidental services and are not supported by proper evidence. 16. In case of software sharing services of the value of Rs. 15,60,534/-, ld. TPO again determined the ALP of the services at nil on the ground that the taxpayer has failed to bring on record any basis to claim that it is sharing the trading terminals and it has not shown what kind of project work has been undertaken and even HR services that it refers to. Ld. CIT (A) again upheld the findings of the ld. TPO by holding that these services in the nature of duplicative/ incidental/ shareholder services. Ld. CIT (A) accordingly determined the intra group services at Rs. 2,27,84,103/- as a....
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....rocuring such services in the light of the decisions rendered by Hon'ble Delhi High Court in case of EKL Appliances Ltd. and Cushman Wakefield (supra) after providing an opportunity of being heard to the taxpayer." 14. In view of the above material facts, non-appreciation of evidence and additional evidence by Ld. TPO and Ld. CIT(A), and respectfully following the judicial precedents, impugned order is set aside and the matter is remanded back to the TPO to decide the issue afresh after examining the evidence/ additional evidence brought on record by the assessee, after affording a fair opportunity of hearing. Accordingly, Ground of Appeal Nos. 2 and 3 for the assessee and Ground of Appeal Nos. 1 and 2 for the department are partly allowed for statistical purposes. 15. Regarding Ground of appeal Nos. 1 to 1.1 of the Assessee and Ground No. 3 of the Revenue are relating to Corporate Tax Additions, the Assessee had brought forward losses and claimed losses as per the books of account as appearing at the end of the previous year. Ld. CIT(A), by considering unabsorbed depreciation for Assessment Years 1997-98 to assessment year 2000-2001 as current appreciation, as the same h....