TMI Blog2016 (12) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, no part of royalty payment can be considered as royalty of Rudrapur unit and therefore, the action of AO/TPO to apportion part of royalty payment to Rudrapur unit is not valid and proper. We hold accordingly and appeal of Revenue for AY 2010-11 is dismissed and ground Nos. 9 & 10 of assessee’s appeal for AY 2011-12 are allowed. - IT(TP)A No.188/Bang/2015, IT(TP)A Nos. 87 & 88/Bang/2016, IT(TP)A No.295/Bang/2015, - - - Dated:- 17-10-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Assessee : Shri S. Ramasubramanian, CA For The Revenue : Miss Neera Malhotra, CIT(DR) ORDER Per A.K. Garodia, Accountant Member Out of four appeals, two appeals are filed by the assessee for the assessment years 2007-08 and 2011-12 and remaining two appeals are for assessment year 2010-11 which are cross appeals filed by the assessee and revenue. All these were heard together and are being disposed of by way of this common order for the sake of convenience. 2. The grounds raised by the assessee in ITA No.87/Bang/2016 are as under:- 1. That the order of the learned assessing officer in so far it is prejudicial to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g is perverse as the appellant has not received the above sum. 12. That the learned assessing officer erred in law and on facts in holding interest u/s 234D of the Act on a sum of ₹ 50,51,711 even though the appellant has not received the refund at all. 13. That the learned assessing officer erred in law and on facts in levying interest u/s 220(2) of the Act even though the demand raised in the original assessment order does not survive once the Hon ble Tribunal has set aside such assessment. Each of the above grounds is without prejudice to one another and the appellant craves leave of the Hon'ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify one or more of the above grounds either before or the time of hearing of this appeal. 3. Ground No. 1 is general and no separate adjudication is called for. Regarding ground No.2, it was submitted by the ld. AR of assessee that DRP should have decided the issue on merit and it is not correct on the part of DRP to say that DRP has no jurisdiction to decide the matter arising out of draft assessment order passed in consequence to the directions of Tribunal u/s. 254. 4. Regarding gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) of section 144C. Hence these words first instance is not with this purpose that the DRP will get jurisdiction only against the original draft assessment order and not against the draft assessment order passed as per direction of the Tribunal. Hence on this aspect, we reverse the order of DRP and hold that DRP should have decided the issue on merits instead of saying that DRP has no jurisdiction when the draft assessment order is passed by the A. O. on the set aside of earlier order by the Tribunal. Ideally in this situation, we should have restored back the matter to the file of DRP for decision on merits but in view of the ground No.3 of assessee s appeal and as per the order passed by the TPO u/s. 92CA, we find that the TPO has passed the order without giving any opportunity of being heard to the assessee. 8. We find that in the order of TPO dated 30.01.2015, the TPO has reproduced the directions of the Tribunal and thereafter, he has stated that accordingly this order is being passed and he has passed the order on various issues such as Most Appropriate Method, variables, determination of ALP and there is no whisper in this order of TPO that any opportunity of bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of ALP by adopting CUP method, decision of comparables is essential. It is submitted that accordingly in the present two years also, entire matter in connection with the TP issue should be restored back to the file of TPO for fresh decision with similar directions. 13. The ld. DR supported the orders of authorities below. 14. We have considered the rival submissions. We find that in the present two years, the main objection of the TPO is that the assessee has not shown that the allied services received from the AE are required for the assessee s business and also that the assessee is not capable of getting these services locally or on its own. Thereafter, the TPO concluded that the assessee did not show as to what is tangible and substantial commercial benefit derived by the assessee from the allied services and consequent payment of technical and management cost and on this basis, he disallowed the entire payment. 15. For the AY 2007-08, similar issue was before the Tribunal and as per the Tribunal order for AY 2007-08 (copy available in Paperbook), this issue was decided by the Tribunal vide para 9.1, which is reproduced below for the sake of ready reference:- 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the comparable cases, as far as quantification of the expenses is concerned, we find that as held by the Hon'ble Supreme Court of India in the case of M/ s Consolidated Coffee Ltd., Vs State of Karnataka 248 ITR 432 (cited supra), has held that allocation of expenditure on the basis of turnover is justified. Since these findings of the TPO on the rendering of services and allocation of expenses are erroneous, we set aside the matter to the TPO with a direction to recompute the ALP by taking into consideration the allocated expenses by the AE to assessee. Further, it is also to be observed that the revenue authorities have to adopt a uniform and consistent approach in the case of the assessee on the same set of facts for each year. Though, the assessee has been receiving the services from its AE from the year 2003 onwards, the TPO has not made any transfer pricing adjustment till the AY: 2006-07 and even for the subsequent AY: 2008-09 where the assessee has received the services from its AE. Once the TPO has accepted the ALP computed by the assessee by virtue the very same licence agreement dated 31- 10-2003 (as per which the assessee has been receiving services year after year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment can be considered as royalty of Rudrapur unit and therefore, the action of AO/TPO to apportion part of royalty payment to Rudrapur unit is not valid and proper. We hold accordingly and appeal of Revenue for AY 2010-11 is dismissed and ground Nos. 9 10 of assessee s appeal for AY 2011-12 are allowed. 19. Regarding ground No.11 of assessee s appeal for AY 2011-12, the ld. AR of assessee reiterated the same contentions which were raised before DRP. The ld. DR supported the orders of authorities below. 20. We have considered the rival submissions. We find that it is noted by DRP on page 9 of its order that assessee has provided sample copy of invoice regarding addition to fixed assets. Hence it is seen that even before DRP, full details and supporting invoices regarding claim of addition to fixed assets were not furnished. Hence on this issue, we find no reason to interfere in the order of AO/TPO. Accordingly ground Nos. 11 of assessee s appeal is rejected. 21. In the result, appeal of assessee for AY 2010-11 is allowed for statistical purpose and for AY 2011-12 is partly allowed for statistical purposes and appeal of revenue for AY 2010-11 is dismissed. 22. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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