Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (12) TMI 357 - AT - Income TaxValidity of service of notice u/s 143(2) - Whether notice was not within the limitation period? - Held that:- This case, the notice was admittedly issued by the AO within the prescribed period of 12 months from the end of the month in which the return was filed by the assessee, which fact has been confirmed by the Postal Authorities as well, the ld. DR contended that it should be considered as duly ‘served’ on the assessee within the meaning of proviso to section 143(2). Albeit, this contention was earlier resisted, but during the course of hearing, the ld. AR did not oppose this argument advanced on behalf of the Revenue. He candidly, admitted that this issue may be decided in favour of the Revenue. Without going into the legal aspects of the arguments on this issue, we allow this ground of appeal on the concession made by the ld. AR. - Decided againt assessee. Addition on account of transfer pricing adjustment - application of the most appropriate method to the international transactions - CIT(A) deleted the addition - Held that:- Application of the CUP as the most appropriate method becomes more imminent in a case where comparable uncontrolled transactions are internal. Adverting to the facts of the instant case, we find that the assessee itself admitted before the AO that the services provided to the AEs and non-AEs are similar. Since the internally uncontrolled comparable transactions of rendering similar services as provided to the AEs are available, we hold that the decision of the AO to apply CUP as the most appropriate method does not warrant any interference. We, therefore, approve the view taken by the AO in determining the ALP of the international transaction of `Service’ revenue from its AE on the basis of CUP method as against TNMM applied by the assessee. Here, it is pertinent to mention that the AO has confined himself only to the determination of ALP in respect of 'Service’ revenue by impliedly accepting the international transaction of 'Equipment supply’ revenue at ALP. Out of seven invoices raised on India Glycols Ltd., three invoices for ₹ 24,000/- each represent `Site visit’ to M/s India Glycols Ltd., for discussions about the work undertaken to be done by the assessee for them. These invoices represent site visiting charges by the assessee’s employees for which there is a charge of ₹ 24,000/-, which rate on hourly basis, comes to ₹ 1,500/-. In so far as the rendering of actual service is concerned, the invoices are for sum of ₹ 2,80,000/-, ₹ 2lac, ₹ 1,22,000/- and ₹ 90,000/- on India Glycols Ltd., and ₹ 44,550/- on M/s Petron Engineering Construction Ltd. These five invoices represent service charges for the actual work done by the assessee to these unrelated parties. The AO has ignored these five invoices and picked up only three invoices of ₹ 24,000/- each for determining the benchmark rate of ₹ 1,500/- per hour, which, in fact, represented merely site visiting charges undertaken by the assessee’s employees. If all the eight invoices are considered, the average hourly rate comes to ₹ 717/- per hour which was placed before the AO, who chose to ignore the same. If we ignore the three invoices of ₹ 24,000/- each from both the sides, namely, revenue as well as the number of hours, the average hourly rate charged comes to ₹ 682/-. Viewed from any angle, the price charged by the assessee from its AEs at ₹ 1135/- per hour is definitely at arm’s length in comparison with the average price of ₹ 717/- or ₹ 682/-, as the case may be. In view of the foregoing discussion, we are of the considered opinion that the ld. CIT(A) was justified in deleting the addition on merits - Decided in favour of assessee.
|