TaxTMI 
TaxTMI 
2026 (7) TMI 1974
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....013-14 herein; raises the following grounds: "Transfer Pricing Grounds General Grounds 1. that on the facts and in the circumstances of the case and in law, the order passed by the Ld. Assessing Officer("AO") is bad in law and void-abinitio. 2. that on the facts and in circumstances of the case and in law, the reference made by the Ld. AO suffers from jurisdictional error as the Ld. AO did not record any reasons in the assessment order based on which he reached the conclusion that it was "expedient and necessary to refer the matter to the Ld. Transfer Pricing Officer ("TPO") for the computation of the arm's length price ("ALP"), as is required under section 92CA(1) of the Act. Economic Analysis 3. That on facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Hon'ble CIT(A) erred in making an addition of INR 3,06,57,542 /- on account of transaction of CITA receipt of intra group services, to the returned income of the Appellant by re as under: the arm's length price of the above international transaction under section 92 of the Act as under: 3.1 erred by rejecting benchmarking approach adopted an....
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....orrectly determining the mark-up charged by AE on the sale of fixed assets to the Appellant, wherein the Ld. TPO has erroneously considered the cost incurred by the AE, in supplying the fixed assets, as the markup 4.5 by disallowing the mark-up charged by the AEs on the sale of fixed assets to the Appellant without providing any supporting document/analysis to show that in an independent scenario such mark-up on the sale of fixed assets is not charged 4.6 in making a TP adjustment in contravention of the rule of consistency when in Appellant's own case for FY 2006-07 200708 and 2008-09. Ld TPO had accepted the arm's length nature of the purchase of similar fixed assets 4.7 in not following the rule of consistency and not restricting the amount of adjustment to depreciation on the markup even when the Hon'ble CIT (A) in Appellant's own cases for AY 2010-11, 2011-12, 2012-13, AY 2014-15 and AY 2015-16 had restricted the amount of adjustment to extent of depreciation on the markup 4.8 in not taking cognizance of the fact that 9% alleged markup out of 11% alleged markup charged by AEs of the Appellant is to be dis-allowed whereas the ....
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....here is no provision in the income-tax return form for claiming the refund of DDT. Interest under section 234A, 234B, 234C and 234D of the Act 7. erred in levying the interest under section 234A, 234B, 234C and 234D of the Act. Initiation of penalty proceedings 8. erred both in facts and in law in initiating penalty proceedings under section 271 (1) (c) of the Act. The Appellant craves leave to add, alter, omit or substitute any or all of the above grounds of appeal, at any time before or at the time of the appeal." 3. Learned counsel submits very fairly at the outset, that the assessee's first and second substantive grounds raised herein are general and seventh and eighth are consequential in nature. Rejected in very terms. 4. Next comes the assessee's second and third substantive grounds grounds directed against both the learned lower authorities' action inter alia making the impugned arms' length price 'ALP' adjustments involving varying sums regarding its international transactions with his concerned associate enterprises "AEs" in receipt of Intra Group Services and purchase of fixed assets, respectively. Both the parties at this stage ....
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....p services is at Nil. During the appellate proceedings, Ld. AR has accepted that there is no allocation key applied by the AE in respect of intra group services. Further, during transfer pricing proceedings even after issuing show cause the appellant has not submitted the base and computation of expenditure entered by the AE with respect to available intra group services provided to the appellant. In absence of such data it is difficult/impossible to quantify the expense in the hands of AE and adding markup of 4% of such estimated expenses is only on ad hoc basis as these figure of the expenditure in the hands of the AE in respect of intra group services itself could not be proved. These Even during the appellate proceedings Ld. AR has relied on the various documents/Information in respect of rendering of services. documents/Information are in from of minutes and agenda where the name of senior person of the appellant is appearing and correspondences for the implementation manufacture, environment performance, data server documents, training manufacture documents managements approach, premium scale model. I have considered these informations/documents. These infor....
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....ce is at NIL as taken by the TPO. Considering the entire facts, I approve the action of the TPO on making arm's length price adjustment for Rs. 70,06,041." 5.14 The material facts of the case are the same in the instant year. In accordance with the principle of consistency and respectfully following the order of the CIT, appeal in AY 2010-11 it is held that intra group services has to be benchmarked separately as no independent party would make payment for such services. I approve CUP as the most appropriate method and its arm's length price is at NIL as taken by the TPO. Considering the entire facts, I approve the action of the TPO on making arm's length price adjustment for Rs. 75,85,789." 7.6 A similar view was taken by the CIT(A)-44, New Delhi in AY 2012-13 in Appeal No. 124/2017-18. The material facts of the case are the same in the instant year also. The allocation key applied by the AE in respect of Intra Group Services and the basis and computation of expenditure entered by the AE with respect of intra group services provided to the appellant have not been submitted. In absence of such data it is difficult/impossible to quantify the expense in ....
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....The ground of appeal is dismissed. 10. Ground no. 5 is against the determination of ALP of purchase of fixed assets, wherein the TPO disallowed the mark-up of Rs. 3,93,99,009/- charged by AEs. 10.1 During the year under reference, the appellant imported fixed assets from its AEs from Denso Corporation, Japan and Denso Tool and Dye, Thailand. The imported items included small value capital goods as in the earlier years. A mark-up of 11% was applied to the written down value of the assets appearing in the books of accounts of the AE to quantify the cost of the goods in the hands of the appellant. The details of the same have been given at para 6.2 of the order of the TPO. A further nominal profit mark-up of 2% was added to the cost arrived as above. Without prejudice to its other argument, the appellant has stated that the amount of adjustment should be restricted to the mark-up portion and not to the entire amount of purchase. 10.2 The relevant extract of Ld. CIT(A)-44 on this issue for AY 2015-16 is reproduced below: "6.13 A perusal of the order of the CsIT(A) for AYs 2010-11, 2011-12, 2012-13 and 2014-15shows that the transfer pricing adjustment....
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....roup services ? In our view, the TPO was not justified in selectively picking of only a couple of transactions for different treatment. As discussed earlier, the assessee has entered into 12 transactions with AE. Except one transaction, rest eleven transactions have been benchmarked by the assessee under TNMM by adopting the aggregate approach. While the TPO has accepted assessee's approach in respect of nine transactions, he has segregated two transactions including the transaction relating to intra-group services. Thus, it is not a case where the TPO has entirely disbelieved assessee's claim that the transactions are closely linked transactions. Therefore, in our view, the approach adopted by the TPO to segregate this payment made towards intra-group services is unsustainable. 16. Though, learned Departmental Representative has relied upon the decision of the coordinate Bench in case of International Flavours and Fragrances (India) Pvt. Ltd. (supra) to emphasise that aggregate approach is not acceptable, however, in our view, the decision is factually distinguishable, as in case of International Flavours and Fragrances (India) Pvt. Ltd. (supra), the assessee itse....
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....ality issues etc. It has also helped in reduction of compensation cost to employees. Under the information system services, the assessee was helped to develop and maintain a common system, upgrade and maintain server, upgrade IT environment, internet gateway management, internet web access control, anti-virus software updating and maintenance support and remote access gateway management etc. The receipt of such services was also supported by documentary evidences placed in the paper book. These services have benefited the assessee in reducing fixed cost and enhancement in quality, reducing man hours and inventory amount, clear IT issues and counter measure, centrally managed server, free of cost platforms/software, automated processes, economies of scale etc. In the procurement services, the assessee received services including assistance in selecting the materials and parts supplier to reduce purchase cost by order volume for the group companies, assistance in new material, help in negotiating the price of material centrally, assistance in standardizing cost calculation method etc. Such services have benefited the assessee to strengthen cost effectiveness, supplier basement and pr....
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....e evidence to prove rendition of services. However, the facts are different in the present case, as the assessee has furnished cogent evidence to prove rendition of services by the AE. In view of the aforesaid, we hold that the transfer pricing adjustment suggested by the TPO and addition made by the Assessing Officer in pursuance thereof, is unsustainable." 6. This being the clinching factual position going unrebutted from the Revenue side, we, accordingly, are of the considered view that the learned co-ordinate bench has settled the instant twin issues on rest and there is admittedly no distinction on facts or law as the case may be. We thus, hereby adopt judicial consistency to accept the assessee's twin substantive grounds to delete the impugned transfer pricing regarding Intra Group Services as well as purchase of fixed assets adjustments in very terms. 7. Lastly comes the assessee's fifth and sixth substantive grounds seeking benefit of Double Taxation Avoidance Agreement 'DTAA' between India and Japan qua the rate of tax on payment of dividends to the shareholder AEs namely, M/as Denso Corporation, Japan. Both the parties are very much ad idem during the course of hear....
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..... Panji Goa and Ors. (Tax Appeal No.5/2004 decided on 28 November. 2025) lays down the correct position in law when it holds that. Dividend Distribution Tax (DDT) is a tax paid by the Company, on dividend income of the shareholder. entitling the shareholder of the benefit of the provisions of Double Taxation Avoidance Agreement (DTAA) between India and UK? (ii) Considering the decision of the Supreme Court in Godrej and Boyce Pvt. Ltd. (supra), whether the decision of the Division Bench in M/s Colorcon Asia Pvt. Ltd. (supra) is per incuriam? 3. Having regard to the ramifications of the aforesaid questions being answered either way. several intervention applications (IA No. 143674/2026, IA No.147312/2026, ΙΑ NO.146726/2026 and IA No.151478/2026) have been filed. To enable the parties to make their submissions before us. the intervention applications are allowed. 4. Having regard to the fact that similar issue may have arisen before other High Courts also, we deem it appropriate to direct that the Registry of this Court shall circulate this order to all the High Courts. The Registry of the each High Court shall publish this order in the cause lis....