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2017 (9) TMI 1649 - AT - Income TaxInvalid transfer pricing proceedings - Reference to TPO - Held that:- reference to the TPO as per the CBDT guidelines is part of the scheme of verification of certain aspects of the Returns filed by the assessee for scrutiny/TP ALP verification to cross check the accuracy of the contents. This cannot be assumed to be hurting the assessee or adversarial. Therefore, the very reference to the TPO per se has no harm or damage to the assessee. Further, the DRP observed that the sovereign Government as a matter of scheme of filing of Returns is duty bound to verify and ensure that the IT Returns filed by the citizens are proper and as per the Law. However, considering the shortage of resources and to ease some hardship to tax payers in attending to the requirement of tax audit/TP Proceedings, the Government over the period of time, have brought down the percentage of scrutiny of IT Returns from 100%(pre-1990) to lesser percentage of the total Returns filed over a period of time. Therefore, the DRP held that the mere fact of initiating scrutiny of returns/ ALP by the TPO/AO cannot be considered as illegal and denial of the natural justice. Accordingly, the objection raised by the assessee is rejected. DRP observed that as per Rule 10B(4) financial data relating to the financial year in which international transactions were undertaken has to be used as per Rule 10B(4) of the Income Tax Rules, unless it is established that the use of data of the earlier financial years will result in more reliable results, which the assessee failed to establish. Arm’s length price adjustment towards corporate guarantee - Held that:- When there is no internal benchmark and also considering the fact that the judicial pronouncements confirmed the fee in the range of 0.25% to 3.0% year on year, we are of the view, that for the current FY, the SBI rate which is 1.8% per annum for the relevant year is reasonable and accordingly, direct the TPO/AO to adopt the same, in place of 2% Addition towards charging interest @ 14.75% on advances - Held that:- We are not in agreement with the request of the assessee that on the above said advances, the AE's had allotted Shares to the assessee company on 30.09.2012, hence no interest can be charged. The allotment of shares was not completed in time before 31-03-2012. The shares were allotted during the subsequent FY on 30.09.2012. Hence, the same cannot come to the rescue of the assessee. DRP held that the TPO is justified in making the adjustment on this account and confirmed the action of the TPO in charging the interest on advances. ALP adjustment towards outstanding receivables - Held that:- As noticed by us that the TPO, in the order passed under section 92CA(3), has charged for the delay in receipt of amounts from AEs in respect of the amount outstanding for the period 01.04.2011 to 30.09.2012 stating that the assessee had not provided the details of date of invoice and actual date of realisation. Accordingly, we direct the Assessing Officer to restrict the adjustment for delay in payment till the end of the financial year in respect of the entire receivable, provided the assessee furnishes the complete details of amount due date wise in respect of each invoice raised during the current year including the balance amount due in respect of invoices raised during the earlier years, if the assessee furnishes the necessary details within 15 days of receipt of this order. However, if the assessee .fails to furnish such information and the information relating to the interest cost discussed above, within the specified time, the objection may be treated as rejected We reject the treatment of corporate guarantee as international transaction and consequently, ALP adjustment is not warranted on this aspect. Unabsorbed depreciation loss - Held that:- We admit the additional grounds raised by the assessee due to the fact that assessee was not given proper opportunity by the AO before completing the final assessment order. It is the duty of the AO to consider the outstanding unabsorbed depreciation before completing the final assessment. It is the lawful right of the assessee. Hence, we remit this matter back to the AO to verify the lawful claim of the assessee.
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