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2012 (5) TMI 283 - AT - Income TaxTransfer pricing - Challenge to the order passed by the Dispute Resolution Panel (DRP) u/s 143(3) read with sec. 144C - Most Appropriate Method (MAM) - Resale Price Method (RPM) or Transaction Net Margin Method (TNMM) - Selection of comparable - held that:- assessee has followed the internal CUP method for arriving at ALP for the import of raw material, where as the TPO, in his order, has mentioned that the assessee has adopted the external CUP method. Similarly, for the royalty payment, the assessee has adopted the external cup method and it was a single payment, whereas the TPO observed at page 21 of his order that it is recurring payment. There were many flaws in the TPO's order which demonstrate that the facts of the case have not been properly appreciated by the TPO while making the TP study analysis. - Matter remanded bact. Disallowance of warranty provisions - business of desk tops and lap tops from IBM - held that:- Hon'ble Supreme Court in the case of Rotork Controls India (P.) Ltd., (2009 (5) TMI 16 (SC)) has held that when a product is sold with a warranty provision, it cannot be held that the assessee has no obligation for the said warranty but for making a provision for the said warranty a reliable estimate should be made on the amount of obligation and a scientific method should be used. - Matter remanded back for reconsideration. Revenue or capital expenditure - marketing support agreement - held that:- it is for efficient running of the business and deriving revenues there-from. In such circumstances, we are inclined to hold that the fees paid by the assessee for marketing support services rendered by IBM, is clearly revenue in nature and is allowable as deduction u/s 37 of the Income-tax Act. Taking over the business - discharge of the liability of the predecessor - held that:- held by the Hon'ble Supreme Court in the case T. Veerabhadra Rao, K. Koteswara Rao & Co. (1985 (7) TMI 2 (SC)), the successor of a business steps into the shoes of its predecessor and is liable to meet any claims against the predecessor. - Decided in favor of assessee.
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