Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 78 - AT - Income TaxTP adjustment in respect of royalty paid by the assessee-company to its associate enterprises – Held that:- The strange method followed by the TPO to make a TP adjustment in respect of royalty payment is not sustainable in law - She has neither rejected the method followed by the assessee to bench-mark the transaction in respect of payment of royalty nor has been adopted any recognized method to determine the ALP of the said transactions - The approval of SIA adopted by the TPO as basis to make TP adjustment in respect of royalty payment was untenable - As per the said basis, the net sales of the assessee after excluding export sale and other income and the royalty paid thereon were less than the rate of 3.5% approved by SIA, there was no case of any excess payment made of royalty by assessee than approved by SIA to justify its disallowance by way of TP adjustment - The ld. CIT (A) could not appreciate these infirmities in the order of the TPO – Decided in favour of assessee. Arm's length price in respect of COE-3 related expenses – Held that:- Following assessee’s own case for A.Y. 2002-03 - It is incumbent upon the TPO to work out the ALP of the relevant transactions by following some authorized method and the entire cost borne by the assessee cannot be disallowed by taking the ALP at Nil, keeping in view the facts and circumstances of the case and the relevant details furnished by the assessee - The exercise of ascertaining ALPs has to be done by the TPO keeping in view the well laid down scheme in the relevant provisions of the Act – The issue was restored for fresh adjudication. TP adjustment in respect of sharing of cost advertising campaign – Held that:- The total cost of David Beckham advertising campaign was clearly stated by the assessee in its submissions made before the TPO as £ 25,00,000/- and its share in the said cost was stated to be USD 2 lakhs - The basis of this cost allocation has not been explained by the assessee by producing relevant documentary evidence either before the authorities below or before the Tribunal - The share was agreed after due negotiation considering the benefits of the campaign - The onus in this regard is on the assessee to produce the relevant documentary evidence to support and substantiate the said claim - It is also incumbent upon the TPO to work out the ALP of the relevant transactions following some specified method on the basis of details and documents available on record - The entire cost borne by the assessee cannot be disallowed by simply taking the ALP at NIL – The issue was restored for fresh adjudication. Deduction u/s 80IB – Held that:- Following assessee's own case for A.Y. 2002-03 - The provisions of section 80IB are code by themselves as they contain both substantive as well as procedural provisions. The word 'derived from' is narrower in connotation as compared to the words 'attributable to'. By using the expression 'derived from' Parliament intended to cover sources not beyond the first degree. The assessee has claimed deduction u/s 80IB in respect of receipts which are incidental to the business and so beyond the first degree - The disallowance on account of assessee's claim for deduction u/s 80IB in respect of first four items of other income is confirmed - The disallowance to in respect of income from insurance claim is deleted – Partly allowed in favour of assessee. Proportionate management expenses – Held that:- Following CIT vs. Central Bank of India [2003 (4) TMI 49 - BOMBAY High Court] - Deduction u/s 80M is allowable on net dividend arrived at after taking into account actual expenditure incurred for the purposes of earning such dividend and not the estimated proportionate expenditure – The issue was restored for fresh adjudication. Travel expenses of spouse of employees – Held that:- Following assessee's own case for A.Y. 1997-98 – The expenses are disallowed – Decided against assessee. Depreciation at higher rate of 80% - Held that:- The copy of certificate of the engineer of vendor is not sufficient to allow the claim of assessee at higher rate of 80% - The assessee has failed to furnish the product catalogue and certificate from the competent authorities to establish the nature and use of the asset to show that it is energy saving device eligible for depreciation at higher rate of 80% - The assessee has also not produced any evidence in support of its alternative claim of depreciation at the rate of 60% applicable to computer systems - Decided against assessee. Advertisement expenses – Held that:- Following assessee’s own case for A.Y. 2001-02 - The advertisement expenses were treated as capital expenditure – Decided against Revenue.
|