TMI Blog2013 (5) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial and taxation services etc - Held that:-evidences are being placed on record by way of additional evidences to demonstrate the fact that entire administrative and marketing support services, required for the business of the appellant, were, in fact, being performed by Talbros - thus additional evidences, is necessary for proper adjudication of the issue - hence the additional evidences are admitted and the case is remitted back to AO to consider the issue afresh - Remanded back for statistical purposes - I.T.A. No. 5931/Del/2012 - - - Dated:- 21-5-2013 - SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER Assessee by : Sh. Ajay Vohra, Adv., Sh. Abhishek Aggarwal, CA, Sh. Ramit Katyal, CA Department by : Sh. Peeyush Jain, C.I.T.(D.R.)/TP ORDER PER SHAMIM YAHYA: AM This appeal by the Assessee is directed against the Order of the Assessing Officer passed u/s. 143(3) read with section 144C of the I.T. Act and pertains to Asstt. Year 2008-09. 2. The grounds of appeal read as under:- General:- 1. That the impugned order of assessment framed by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business of the appellant. 2.8 That the Assessing Officer /TPO erred in law in not aggregating the transaction of payment of management fee with other interlinked international transactions and erroneously seeking to benchmark it separately. Corporate Tax Issues:- 3. That the Assessing Officer erred on facts and in law in disallowing a sum of ₹ 1,23,27,262/- being payment made to Talbros Automative Components Ltd. (TACL) towards administrative services under section 40A(2) of the Act. The appellant craves leave to add, amend, alter or vary, any of the aforesaid grounds of appeal before or at the time of hearing of the appeal and consider each of the grounds as without prejudice to the other grounds of appeal. 3. Apropos Transfer Pricing Issue (Ground Nos. 2 to 2.8) 3.1 With regard to the above grounds, at the threshold ld. Counsel of the assessee sought to place on record the following additional evidences:- 1. Estimated cost (based on gross CTC) of visits of executives (technical experts) and technicians to the associated enterprise in respect of visits of the technicians for providing technical support services. (pages 590 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning for certain specified hours. (vi) Feed-back based on the results of the validation and any necessary changes that may have to be incorporated in the product as a result of testing. (vii) Re-testing / revalidation, if required. (viii) Release of approved drawing for mass production and manufacture of necessary tooling for such mass production. Since Honda R D as well as the associated enterprise, under consideration were situated in Japan, involving the associated enterprise, was the most economical and efficient way of developing gaskets which were approved by Honda, Japan for being manufactured by the appellant in India, to be fitted in the engine / vehicles assembled / manufactured by Honda in lndeia. After the product is approved by Honda R D and the specification frozen, the action shifts to India where the mass production takes place. The appellant has to co-ordinate very closely with Honda India for submission of off tool samples and plan of readiness for mass production in tune with the customer's start of production. This will involve continuous interaction with the customer's technical as well as commercial departments to bring it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt fee (ii) Details of costs incurred by the associated enterprise in connection with (a) representing the appellant for securing new business, (b) testing validating raw material and (c) selection and commissioning of capital equipment. (iii) Details of visit of technical and marketing expatriates of the associated enterprise during the relevant previous year. (iv) Details of new products developed by the associated enterprise for the appellant during the relevant previous year. (v) Details about the purchase of new capital equipments with the technical assistance provided by NLK, Japan. (vi) Details of new client added pursuant to product development efforts made by NLK, Japan. It was also submitted that the above product development services were highly technical and sophisticated and could not be undertaken by the appellant in-house owing to lack of technical know-how, expertise and knowledge and for that reason, NLK, Japan was specifically requested to provide such services. The TPO, however, while completing the assessment vide order dated 31st October, 2011, inter alia, observed that, this is quite surprising considering the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciated that this is the first appeal before the Hon'ble Tribunal against the impugned assessment order. The appellant, in order to rebut the findings of the assessing officer TPO and to support the arms length price of international transaction of payment of fee for product development services undertaken with the associated enterprise, has collected the aforesaid additional evidence from its associated enterprise, which is now placed before the Hon'ble Bench by way of additional evidence. 3.3 Further prayer of the assessee in this regard is as under:- It is respectfully submitted that if subsequent events occur, the appellate authority has to examine and evaluate the same and mould the relief accordingly (ref. Pasupuleti Venkateswarlu vs. The Motor General Traders. AIR 1975 SC 1409). Reliance is also placed on the decision of Hon'ble High Court in the matter of Text Hundred India Pvt. Ltd. vs. CIT (ITA No. 2077,2061 and 2065/2010), wherein the plea for admission of additional evidence before the Tribunal was accepted by the Hon'ble High Court. Your Honour's attention is also invited to the decision of Mumbai Bench of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it the same to the file of the Assessing Officer. The Assessing Officer shall consider these grounds afresh, in light of the additional evidences as mentioned above. 5. Apropos Corporate Tax issue (Ground no. 3) 5.1 The assessee during the year incurred expenditure amounting to ₹ 1,23,27,262/- on account of administrative charges paid to M/s Talbros Automotive Components Ltd. for provision of services. In consideration of the services, the assessee pays 10% of profits before tax to Talbros. The above payment are disallowed by the Assessing Officer. The Assessing Officer disallowed the payment of administrative charges u/s. 40A(2) of the Act on the ground that the assessee has failed to prove the reasonableness and justification for the aforesaid amount. 5.2 Now in order to demonstrate the management services rendered by Talbros, the assessee sought to place the following by way of additional evidences:- IT Services - All the IT related activities I services were provided by Talbros IT department and there was not a single IT employee at the JV company. Photocopies of some of the documents concerning selection of software, hardware, placing of orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Compliance - The persons employed at the JV company do not possess required professional qualifications to comply with various statutory requirements and regular supervision, coordination and support is provided by Talbros tem for various labour laws. Copies of certain communications regarding compliance with the Payment of Bonus Act, is placed at Pages 706 to 707 of paper Book II Secretarial Services - Though, the JV company because of statutory compliance has a junior company secretary on its roll but all the secretarial activities coordination with Registrar, Company Law Board and other authorities is done by Talbros secretarial team. Photocopies of e-mail communications evidencing Regional Director permission under the Companies Act taken by the Talbros team for the JV company are placed at Pages 708 to 712 of paper Book II. 5.3 In this regard, assessee has further submitted as under:- From the aforesaid, it would be noted that Talbros is providing a wide array of services such as IT services, Accounting Services, financial and taxation services etc. The documents sought to be placed on record by way of this application in the form of e-mail commun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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