Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2011 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2011 (11) TMI 398 - ITAT MUMBAITransfer Pricing – CIT(A) deleted adjustment made to ALP - assessee wholly owned subsidiary of foreign company(MTC) - international transaction of providing contract research services in specific area of agriculture, agro chemicals, market research on products launched by MTC and corporate support services - disputes regarding comparability of the comparable relied upon by the TPO – rejection of one of the comparable companies identified by the Assessee, consideration of which would lead to difference between ALP and the Price adopted by the Assessee be less than 5% plus or minus contemplated by the second Proviso to Sec.92C(2) - determination of nature of services performed by assessee - whether high end or low end services –– Held that:- Clingene International Pvt. Ltd. was engaged in similar activity as Syngene International Private Limited - one of the companies considered by TPO as comparable. Assessee pleaded that if Syngene is considered as comparable, then even Clingene ought to have been included as a comparable in determining the ALP. On look at the way Operating Profit has been arrived at in both the cases, it is observed that adjustments made to the operating profit margins of the two comparables would get neutralised and therefore their margins as claimed by the Assessee for arriving at the arithmetic mean of 11.71% after including all comparable companies considered by the TPO and the results of Clingene International Pvt. Ltd. is held to be proper and acceptable. In view of second Proviso to Sec.92C(2), the price at which the international transaction has actually been undertaken shall by the Assessee is held to be at arm's length. The order of the CIT(A) is upheld on this ground - Decided against the Revenue. In view of the above conclusion, the other issues with regard determination of nature of services and non-consideration of other factors laid down in Rule 10B(1)(e)(i) are not being considered. In respect of deletion of dis-allowance of interest paid on working capital loan received from group company (MIL) – assessee have also advanced interest free loan to MIL for placing security deposit by MIL with the lessor in respect of flat taken for accommodation of Business Head – A.O. disallowed deduction of interest paid on working capital loan to MIL of amount corresponding to the notional interest on interest free sum advanced to MIL - Held that:- MHPL as a group holding company of Indian ventures, provides certain support/steward services to various downstream ventures in India. It is clear that the interest free advance in question was owing to commercial and business expediency. There is no nexus between the advance placed by the appellant and the working capital borrowing obtained by the appellant from MIL. Therefore the disallowance of interest was rightly held to be not proper by the CIT(A) – Decided against the Revenue.
|